The `700 rule' presumably is inspired by Article 12.3 of the FIDE Rating Regulations:
Originally Posted by SquishyDoggy
If you play 18 FIDE-rated games in a month, then your K factor for that month will be 700/18 ~ 39, as opposed to 40.
K is used as a stabilising influence in the system. When K = 10, the rating turns over in approximately 70 games; K = 20, it is 35 games; K = 40, it is 18 games.
I don't think this should really discourage anyone from playing. My K factor is 20, and I still play. Strong players have K=10, and are still playing.