I know this because I used to buy an extra d4 every time my wizard hit an odd numbered level.
The cap was introduced later because it was a stupidly good spell when it kept scaling - 3.5 from d4+1 is the same expected return as the d6s from wizards' signature spells like fireball and lightning bolt except those can sort of miss (save for half) so your expected value is actually lower for those, over a number of encounters.
Not that I, you know, ever min-maxed that sort of thing...
It's one per two levels
The cap was introduced later because it was a stupidly good spell when it kept scaling - 3.5 from d4+1 is the same expected return as the d6s from wizards' signature spells like fireball and lightning bolt except those can sort of miss (save for half) so your expected value is actually lower for those, over a number of encounters.
Not that I, you know, ever min-maxed that sort of thing...