1. Yes, there is an Output cap of sorts, obviously it varies depending on what grade you're targetting, though I'm pretty sure the max # of gathers on a single node is 8, not 7. Perhaps you were using the "You can gather here 7 more times" as your number? Beyond this point, stacking more output is pointless, yes, unless someone can show that it does anything more than increase the number of gathers at a node.

2. I'm pretty sure your level sets your base Gathering/Output/Perception stats (base not shown in stat window) and everything else is piled on top. Either that or you were using gear that was over your level and you leveled into it.