the issue of whether or not swift goes too far in "a modest proposal," is an issue of taste. it's a satire, of course, so the speaker has much freedom in what he writes. he also uses irony. both satire and irony often use exaggeration as tools to accomplish their purposes. so, again, the writer has a great deal of freedom to work with.
the question is, though, even within the accepted norms of satire and irony, whether or not what swift does is in bad taste. his proposal and his descriptions, etc., are certainly grotesque, and his central idea strikes at the core of humanity--cannibalism.
ultimately, however, though the essay probably is in bad taste, swift decides that using bad taste is worth the risk. the essay shocks the reader, and probably would not have done so if it weren't in bad taste. the bad taste of the proposal is part of the point.
in the end, each reader probably decides whether the essay is in bad taste, whether it goes too far. i love the wit and the humor and the satire and the irony. but that doesn't mean another person wouldn't find the essay in bad taste.