The limitations owing to device heating and thermo-optic effects in high-speed quantum-well microcavity saturable absorber devices are investigated both theoretically and experimentally. A simplified theoretical description of the device electronic, thermal, and optical properties is developed and applied to the modeling of the device switching characteristics for reamplification + reshaping step (2R) all-optical regeneration. These predictions are compared to nonlinear optical measurements performed with switching pulses of fixed duration and variable repetition rate on two devices with significantly different thermal properties. It is shown that proper optimization of the device thermal properties is crucial to avoid the degradation of device performance at high bit rate. It is also shown that the negative effects of optically induced heating on the switching contrast may be compensated to some extent by operating the device on the long wavelength side of the microcavity resonance.