Except that this "lots of power" option does not exist. What limits the amount of power used is the circuit breakers and fuses on the panel, which protect the wiring against overheating by tripping when too much power is being used (or when there's a short circuit). The resident in this analogy would need to ensure that not only the transformer, but also the wiring leading to the transformer, can handle the higher current, and replace the circuit breaker or fuses.

And then everyone on that neighborhood would still lose power, because there's also a set of fuses upstream of the transformer, and they would be sized for the correct current limit even when the transformer is oversized. These fuses also protect the wiring upstream of the transformer, and their sizing and timings is coordinated with fuses or breakers even further upstream so that any fault is cleared by the protective device closest to the fault.