You could fundamentally base draw distance on a square, like that. so yes.
Or you could base draw distance on "rendered Z", wherein it is the distance to an arbitrary plane that is always 2048 render units in front of the camera. You define its other extents by the rule that nothing beyond the camera's FOV would be drawn.
I've seen games do both, with polar (circular) distance or square distance.
I wanted to expand on this, to try to clear this up. It seems that a scroll plane was used for the ocean in Panzer Dragoon Saga, which should have had a limit of 8192×8192 pixels. With the 3D infinite plane able to reach 4,096 pixels, I'm assuming the 3D assets-like pillars in the ocean-fall into this category. Of course there is also a limit of how many polygons can be shown per second in a scene. Does that seem right?
EDIT: I was also looking at the draw distance of Tomb Raider and Sonic R. The latter has all kinds of uneven and spiraling geometry. I find the graphical cutoff easier to quantify in Tomb Raider, because it features a human in a somewhat realistically-sized environment. For instance, we could assume Lara Croft is around 5' 6" tall, so the sizing might be easier to visualize.