Obviously, selection on the level of the individual won't produce individual restraint in breeding. Individuals who reproduce unrestrainedly will, naturally, produce more offspring than individuals who restrain themselves.

Wrong. Sometimes quality, not quantity, matters. Which is why rabbits will abort and reabsorb fetuses when under stress, even though the reabsorption process has a significant chance of causing permanent infertility.

It's not about which organism produces the greatest number of offspring - although restricting fertility can sometimes lead to that - but the greatest number of surviving offspring. It's more complex than a madcap race to reproduce as rapidly and prolifically as possible.