Well, what you are asking and what the title is asking are two different things. To address each of them.
Question: Is Godot only capable for prototyping and small games only?
Answer: Godot is, in theory, just as capable as any other game engine out there. Especially with access to the source code, any barriers could be worked around with enough time, energy, and changes to Godot. In practice though, there are some roadblocks that keep Godot from being an ideal choice for some games. This is mostly limited to 3D though, where Godot is missing some key features. In either case, Godot should have the capability to make fully featured games, especially in 2D, it just may not be as easy as other game engines in certain aspects.
Question: Is performance in Godot better and/or would my game see improvements?
Answer: Yes, Godot performance has gotten better, especially in 2D. Godot now has sprite batching, which sounds like it would be a major boost in performance if your game is 2D and has lots of sprites and particles. I would highly recommend trying the latest version of Godot, Godot 3.2.2, and see what you think. Just make sure to make a backup first, just in case.
Additionally, bonus question: Is GDScript only good for rapid prototyping
Answer: I'd say it depends. For performance critical code or code that is called frequently, you probably want to use either C# (faster) or C++ (fastest). However, for the majority of game code, GDScript's slower execution speed is not too much of an issue because the code is either run infrequently, or is simple enough that the difference in performance is marginal when used in projects. I would suggest a hybrid approach for big/complex games, where GDScript and a more performant programming language are used together That said, this is just off my personal observations and game development experience, your results may vary.
(Side note: For some reason I cannot move this thread, but it ideally should be in the General Chat category due to the general nature of the questions. Not a huge deal either way though)