Yes, that is what I meant by soft-capped. Sorry for not making that clearer. Also, Uriel is a good example of why ppl value exceed weapons - without exceed, the soft-cap would be 1m, and Uriel would have hit for 1.4m-ish instead of 2.3m. You don't have to be a whale to hit caps.
The 90% reduction applies to the 350k normal attack and abilities cap as well (abilities cap numbers are all over the place/most of them are unknown, but one that people often hit is Hercules' full break - soft-capped at 700k.)
For completeness, I'll also mention that echo dmg is NOT counted towards the cap. So that is another way to get around the cap.