Using up 120 SP of perfectly appropriate spells would be ridiculous. Spells generally cost about 4 mana per so, let's say 3 mana per SP to be safe. Assuming 12 mana generated a round that is a minimum of 360 mana and 30 rounds of combat to use all your SP. I'm pretty sure someone wins by then.
It is not ridiculous. Making mages pay more spellbook points for out of school spells keeps their general playstyles intact.
Yes, a regular game is always over before running out of spellbook points. However, such spellbook points costs are one of if not THE reason that people don't run out of cards during a game. If spellbooks were built with no regard for spellbook costs being higher out of school vs in school, they would have much fewer cards in spellbook and perhaps could actually run out.
Not to mention that in Mental Mage Wars, players have to make these sorts of deck building decisions during the planning phase, so someone can decide to go out of school more than would be advisable for a regular game, either for strategic reasons or because the spells they thought of during the planning phase happened to be out of school more often than normal. I think it's actually quite realistic for players to run out of sb points in mental mw, but it probably would happen less often with good players.