talk about a good card to bring from your graveyard into play. you keep everything else except your hand and library? I think Limited is correct. No matter what restrictions you put on it, people will find a way to break it. Here is a way I can already think of.
Time Spiral would be the first spell, then put this fellow out using Dance of the Dead, since he doesn't remove the G'yard from play, so that after he resolves, the Time Spiral does, so then I have a full Library, and a full hand, and a really nasty critter.
Stack: Time Spiral then spell targeting Lost Horror.
Order: Lost Horror comes into play nixing your library and hand, Time Spiral goes off, refilling your Library and Hand. Since he was not cast, You just got a big nasty for BBB. And you still have your life.
Scary huh?