This is a display issue only. Your skills are still levelling up and staying there. AC Will also not be reported correctly on the client if it thinks your defense skill is capped at a lower point than the servers.

Thanks for setting the record straight

Big man, independent of if you would implement this or not, is it possible to make a custom command like /skilltree or /ac that would send your proper skill level and ac from the server to your chat window? May cut down on confusion.

Echoing thanks for the clarification.

So glad I don't have to port to CS anymore !

Moving to resolved as this was a client display issue confirmed by Rogean.