[Pescador]

That's not a dmg cap, being removed - that's a damage bonus becoming effective.

My paladin on live didn't need to skill up to 101 before he started hitting for more - it was just the level removing a cap.

There's a difference between a str and skill-based dmg bonus and a dmg cap. The cap up until level 20 is definitely working similarly to how it was on live (though I think the cap may have been 29dmg, not 40). Anyways, the point is the hard cap on damage until level 20 is in place on this server, which is very similar, or perhaps identical, to how it was on live.

As for skill and str-based damage bonuses, that's a separate issue. But I can say with confidence that on live, there was a hard cap until level 20, and I distinctly remember dinging level 20 on my paladin and suddenly seeing a lot more damage per hit than the previous cap I had seen for all my previous levels.