I know also that every single FEM can only be an approximation of reality.
By the FEM you just obtain an approximation to an (hopefully) well posed problem.
Logical steps are as follows.
- You first set a problem by choosing appropriate equations (congruence, constitutive equations, balance), a geometric domain, material constitutive parameters, and appropriate boundary and initial conditions. If the problem is well-posed this defines a unique solution $L$.
- By the FEM you obtain an approximation $L_\text{FEM} \approx L$.
The small strain/displacement assumption affect the equations that define $L$ (in the sense that you end up with a set of linear congruence and balance equations), and presumably you have a well-defined problem, and therefore are able to easily compute a converged solution $L_\text{FEM}$.
The real question is if $L$ is physically meaningful or not, and of course this question has nothing to do with the particular method you used to compute an approximation to it. This is a question about the equations you are going to solve: are they able to model the physics of your problem?
It is impossible to answer this question without analysing your specific problem and your solution. However in general it is very dangerous to apply continuum mechanics equations outside their domain of validity: why a solution $L$ defined under small displacement assumptions should be physically valid for finite displacements? In my own experience this is almost never the case, apart from some trivial problems.
The equations of linear mechanics can be presented as the linearisation of more general non-linear equations. Intuitively this means that you search for a solution on the tangent to a curve, instead of for a solution on the curve itself: you can make a strong point about the fact that you will end very far from the correct solution.