We are implementing SCCM 2012 R2 and see that in many cases that the RPC Dynamic port range is required. This seems like an excessive number of ports to open and our network team is concerned. Can this be limited as it is a large range or are there alternatives methods to implement this? Are there any caveats if we were to limit the range?

You generally only need dynamic ports between site servers and site roles. This is generally not a big issues as it is point to point.

You can limit the number dynamic ports BUT you can expect issues down the road, if their are to few ports available. These problems will not be obvious.

From where to where are they concern about open ports?

The current concern is between the Site Server and the Distribution Point. With that said per the information provided here https://technet.microsoft.com/en-us/library/Bb632618.aspx I am sure there will be other concerns as well due to the use of the Dynamic RPC port range.

So between a site server and a DP that is a point to point, your networking team should be able to easy setup a firewall rule to all the dynamic traffic between these two servers only.

You can use the following knowledge base article with regards to configuring RPC to work with firewalls:
https://support.microsoft.com/en-us/kb/154596

While there is a KB documenting the methods on how to configure this I would strongly recommend that you encourage your security/network team to open the dynamic port range for communication.

RPC is a standard across a broad range of Microsoft technologies and for a network/security team to not support this is extremely restrictive.