I've never really been sure of what the purpose of the damage cap has been since its inception. I know private servers use high damage as a means of catching hackers, but this is a cap so it's not really the same. I thought about it and decided it might be for balance issues, but however much the cap is right now is pretty imbalanced in itself. Unless I am getting things wrong.
What is the point of the damage cap exactly? It just seems to gimp single hit skill utility and do nothing past that.