Let's ignore 1966. It was long before football truly modernised and more nations became competitive. It was in England and had the help of a very dubious bit of linesmanning.
There have been odd phases when England have had decent teams, as you'd expect for a major European nation, but this is the most consistent run of tournaments I can remember. A semi, a final and then a very close qtr, knocked out by the the most talented team after dominating them for long spells.
Clearly having 66% of foreign players isn't hurting England. And England only have 2% more than Italy who won the last Euro - against England. So the two nations with the highest percentage of foreigners finished 1st and 2nd in the last Euros. Germany have consistently had the second highest over the last few decades and they have won shitloads.
Argentina don't have a better squad than England, not do Tunisia. You don't have to have the best squad to win a tournament - you need a good squad and to be well coached.
Many of the players aren't staying in their own country to develop, they are going to European countries at young ages. That's what more English players should do.
And bottom line, even there was evidence that capping imports worked for international football (there isn't) club football is far more important, generates the players, m pays them, generates all the income, provides the majority of sport and entertainment, why should it suffer for international football.