Summary: the problem with Pascal's Mugging arguments is that, intuitively, some probabilities are just too small to care about. There might be a principled reason for ignoring some probabilities, namely that they violate an implicit assumption behind expected utility theory. This suggests a possible approach for formally defining a "probability small enough to ignore", though there's still a bit of arbitrariness in it.
This isn't what I meant by bounded utility. I explained that in another comment. It refers to utility as a real number and simply sets a limit on that number. It does not mean that at any point "you just stop caring."
If your utility has a limit, then you can't care about anything past that limit. Even a continuous limit doesn't work, because you care less and less about obtaining more utility, as you get closer to it. You would take a 50% chance at saving 2 people the same as a guaranteed chance at saving 1 person. But not a 50% chance at saving 2,000 people, over a chance at saving 1,000.