The could "essentially" raise the level cap to 255 if they wanted, possibly even up to 65535, without having to reprogram anything, just changing some variables.
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They might need to implement stat-tables for the higher levels, unless the stats are generated according to a set of mathematical formulas that will scale neatly up to any level. Of course, changing the level cap without giving us higher stats is also completely possible to do, but wouldn't serve any purpose in the new areas, as level correction was removed.
If they aren't automatically generated, they'd probably need to manually decide the values for these stats at each level.
I'm not going to continue arguing semantics or explain the basics of programming as it's thoroughly off-topic.
Reiterating my earlier post, I believe they put TH on an underpowered weapon because they hadn't planned on raising the level cap and introducing DMG:100+ daggers. It's a moot point now anyway with the TH cap.