In central OH, we don't put a cap on inspection costs in our contracts. It is different than other areas. The buyers have a certain number of days to have their inspections done and then the buyer & seller have a certain number of days to agree on what needs to be fixed. There is no place to put a limit and if I were representing the buyers, I would be leary of a seller that wanted to impose a limit.
Right now I am seeing buyers ask for more than ever in their "request to remedy" forms. It's just the market, they are doing it because they can.
Also, I don't know what price point your house was in, but $500 is normal for earnest money in central OH. Over a certain amount, you might ask for $1,000, but I've had buyers offer $100 earnest money and most of the time sellers take it.