Here are reasons why I think Limes were exterminated. I know fire seems underwhelming compared to laser beams, but I do think there are creative ways to be very destructive.

Now, why did the Empire go for Limes, instead of Golds?

The Alternian empire uses goldbloods as living batteries for their starships. Maybe they are too valuable of an asset to genocide completely. The Empire would use this logic to spare them from extinction, and instead kill Limes, the other most powerful caste, in order to send a message: If the empire can get rid of them, then the Empire can get rid of you just as easily.

You also have to remember, trolls physically get tougher the cooler the color gets (Ex., Gamzee getting a machine gun loaded on him and still living). That means Limes would physically be stronger than Golds. The High Bloods successfully exterminating the physically stronger level would send the message quite clear to everyone below.

Now, onto the destruction Limes can cause to the High Bloods. Yes, High Bloods are the seadwellers, but so are Purples, Indigos, and Ceruleans. High-class landdwellers that would be threatened by fire-starters. Also, the seadwellers could also be threatened just as easily. Even if a lime can't summon a physical flame, I see no reason why water would stop them from producing heat. A lime underwater could heat the water so hot it could boil and kill everything. If the theory that Fiamet is a lime is true (which def is. Her name is theorized to have comes from fiametta, meaning LITTLE FLAME!!!!!!), then aquatic Limes that exist can go directly to high-class seadwellers and boil them.

Even if my way for how Limes could fight underwater isn't true, then I do think the "setting an example" angle works well enough.