just raising the caps for the current spells isn't really the point of having high level magic.
what you're experiencing is the lack of high-realm spells as each spell has a power cap that'll you'll reach quite soon given the current caps, so the highest magic levels won't yield any gain.
however once those high-realm spells are added (realm 6+) it'll automatically balance itself.
problem with those high-realm spells however is that:
1) they still have to be balanced
2) most of the ideas for them lack engine features
3) there aren't enough people to work on it atm I think
in any case: rest assured that magic will become more useful and diverse at some point (just doing more damage is quite boring after all, isn't it?)
and anyway: just thinking of fist of the volcano I'm not sure mages really need more power
(given it can do well over 500 damage and has the maximum practically useable range at the power cap)
(also note that unlike the damage of normal weapons the damage from spells isn't blockable at all atm
)