Why power up a Pokemon with Ample candy already?
Solution 1:
The only clear advantage would be to get one extra rattata candy, which would only be useful to evolve another Rattata to a Raticate, getting 500 XP in the process.
But if the 501 CP Raticate is one of your most powerful Pokémon, then I would keep it for now to use in gyms.
And yes, there's a limit to how far you can power up any given Pokémon, which is based on your level. Once you hit that limit for a Pokémon, the "power up" button will be faded and disabled. If you level up, however, you can power up each Pokémon 2 more times.