This is incorrect. There are certain hero skills that will increase tap damage by a percentage of your hero damage. These are what boosted your tap damage beyond the limits of level a 1000 avatar. I confirmed this in previous version by progressing through the first hundred or so stages on tap damage, before leveling the strongest available hero, and until I obtained one of the hero skills which would convert a portion of hero damage to tap damage, tap damage would not increase in response to leveling heroes. In the present update, the skills still work to increase tap damage based on hero damage, however they seem to have reduced the amount that they do so, as before the update tap damage would tend to be substantially higher than hero damage, while now it is in the realm of a tenth of hero damage (not exactly, but close to 10th in so far as it is one power of 10 less. At present it's actually close to one twentieth for me, but it varies as I get different skills).
I suspect the idea is that players are expected to get the hero badges/weapons, but to make up the difference, but the problem there is they only obtainable via gacha, so odds are you won't get anything useful. I myself attempted two rolls with crystals from fairy chests, and both ended up giving me moetifacts which given I've leveled all of those to the point of diminishing returns was rather worthless.
At any rate, considering the points I've been hitting where damage relative to enemy health slows, I doubt it is very viable for new players to make much progress. I have 21057% damage increase from Moetifacts, various other damage increases from the same, and every Moespirit save the newest at least to level 7. I also have Phantom Arcanum at level 10 and Warm Wendigo Gloves at level 90, making Phantom Barrage have a 5 minute cooldown, while lasting 5 minutes, which given cooldowns start counting from when you activate the abilities, means I can use it immediately after the skill ends. Despite this, I still have encountered points where I required an autoclicker get through, and getting Venus of Fate required I wait on Sleight of Hand to come off cooldown as I couldn't kill things fast enough to earn the gold otherwise. Overall, it seems that they have made too drastic an increase in difficulty, as while I might be able to get through, I can't imagine a new player making much progress at all due to how quickly enemies would scale beyond their ability to handle, and the negligible moe crystal count they would be getting from resetting so low.
Edit: So, on top of increasing the difficulty of lower levels, the max level has also been raised. Given the difficulty increase, I'm not sure how high, since I've hit a significant slowdown of progress around level 2014.