Fire-based weapons already have a great built-in limitation: fuel. Not just the wielder's life-force can be used, but it may have some rare fuel needed to burn. Even if it's just a catalyst (something that starts the spark, which then uses life-points or any liquid fuel, or whatever), that can be something a GM can spring on players whenever it's being used too much.
Or, the item could be cursed. It will burn things from the future, but one day it will ignite its last flame. The rod will then return to Hell, taking its current user with it.
One idea is that the rod is from the future (of Hell, optionally, as above), and is travelling backwards in time. It can burn something that will burn in the future, because from the rod's point of view, it is remembering the past of when that object was burnt. This would have an occasional weird effect, such as a person being attacked by it is briefly trapped in the coffin in which they will someday be cremated. A side effect of all this time-travelling bit, is that the rod o'fire cannot actually kill anyone or fully consume an item. Some part must remain to be again burned in the future.