Over several decades of 737 ops in Australia I can probably count on one hand the number of times I have landed in a crosswind exceeding 20 knots. Others may have seen worse. On the rare occasion I landed in a crosswind at aircraft limits, I was glad to have experienced it at 20 knots beforehand, so as to be confident in the technique.
My personal experience is that if you have experienced a few real crosswind landings at 20 knots, and pulled it off well, then you can now cope with 40 knots. The technique is the same, but the fear factor may affect you if you haven’t already perfected the 20 knot crosswind landing. Oh, and the Sim may be different.
So this leads me to the industry standard F/O limit of 20 knots.
If I was the CP, and didn’t have an insurance company telling me what I should or shouldn’t do, I would limit F/O’s by their experience, not their rank. For example, an F/O with X amount of sectors on type should not have restrictions on their environmental limits. Such an F/O will be a Captain soon, and should be practicing operating to that capacity under supervision.
I would much rather execute my first 40 knot crosswind landing as an F/O under supervision than as a new Captain with a newby in the RHS,
The current system sees to it that the latter will happen, sooner or later,