I am going to speculate that puritanism may have set certain limits on the American imagination because Puritains required or forced everyone that they could acquire or establish power over, to think and practice as they thought and practiced, in religious matters. This religious view may have carried over into other areas, such as political and social. This intolerance of the views of others may then have prevented them from seeing the good that was contained in some of the views and practices of other cultures and other sections of the country. As the descendents of the Puritains moved westward into New York and Ohio and Kansas and other places, they carried this intolerance and self-righteousness with them, "infecting" a large part of the American land and population.
It seems to me that the subtext of the question might be better to appear with the initial quote. That being said, there might be two parts to the answer. The first deals with the limitations on imagination with regards to Puritanism. I think that the fear of sin and the overall fearful position in which Puritans classified themselves in their relationship and understanding to God did limit imagination to a great extent. It is difficult and challenging to conceive of any imagination or the expansion of it if one is in constant fear of how the divine will react to it. Puritans were gripped by this concept in their own consciousness and so one can see how imagination would be limited. However, in a very paradoxical way, one could argue that this also served as a way to develop the concept of imagination. For example, in Salem, the fear of God and of witches caused individuals' imagination to run amok in presuming that there are such things as witches and witchcraft present amongst the townspeople. Part of this happens because of the preoccupation with God and his vengeance and the belief in original sin. In the end, one can see the repression of imagination due to a fear of the divine as well as an expansion of it when it comes to different ways in which the holy powers are unhappy with humanity.