Honor is currently capped at 75,000, a legacy from The Burning Crusade when the most expensive Honor item was a little over half that number. There's a sensible rationale behind the Honor cap, which is in place to curb stockpiling of the currency for future, unreleased rewards. Honor as a currency, unlike badges or emblems, is the same across the board. Players can start accumulating Honor starting at Level 1, while players must be Level 70 to obtain Badges of Justice or Level 80 to collect Emblems of Heroism, Valor, and in Patch 3.1, Conquest.
This works to prevent players from purchasing on-level epics as soon as or even before they ding 80. At most a player can purchase one or two pieces before using up his or her Honor. Emblems work in reverse. It's impossible to obtain emblems below the appropriate level, but there is no upper limit to the number of emblems you can store. Unlike badge gear from The Burning Crusade, where higher tier items for more badges were made available later in the expansion, Blizzard has created different tiers of gear for different emblems. This means it's unlikely that there will be new items available for Emblems of Heroism or Valor.
This means you won't progress gearwise just doing the same thing over and over. In order to get better gear, players will need to raid. In contrast, because Honor is the single currency a singular currency across all levels for PvP gear, Blizzard is constrained as to how to limit accessibility to better gear. They do this by putting a ratings requirement on the best PvP items, requiring successful participation in Arena play. Arenas are to PvP are what raids are to PvE. It's not a perfect system, but it will do for now. But what happens when players reach the Honor cap and have every item they need or want?
The current problem with the Honor cap right now is that there's no Honor dump. Players who enjoy PvP must continue to PvP for no reward other than the sheer enjoyment of PvP. PvP isn't a profitable endeavor at all. While there are associated costs involved in doing instances or raiding, doing instances or raids on farm is extremely profitable, where the money earned from mobs outweigh any durability costs. On the other hand, the only money to be earned from PvP is from the daily quests in Wintergrasp or a random Battleground. Equipment also suffers durability over time, and a few hours of PvP will easily cost quite a bit of Gold in repair.
I've got an issue with this. I've been Honor-capped for weeks now, with nothing to buy. But because I prefer PvP in the Battlegrounds when I'm not raiding or doing Arenas, all I can accrue (or not accrue) is Honor. My Marks of Honor are capped at 100, and I don't even bother to pick up the Marks in the mail because all I can get in exchange for them is -- you guessed it -- more Honor which I don't need. On the flip side, players who continue to do Heroics can pick up Emblems of Heroism which have no upper limit but have more dumps as players can even purchase PvP gear with them. Kalgan has noted it won't be as easy to get PvP gear with Emblems of Conquest, but that's pretty much after the fact.
Most items purchased with emblems can be disenchanted into Abyss Crystals, which can be used to enchant or sold for a hefty profit. Emblems can also be used to purchase Frozen Orbs and rare, uncut gems, both of which can be used or sold for profit. Honor can only be used to purchase PvP gear and a few uncommon jewelcrafting designs. PvP items cannot be disenchanted nor sold to vendors. As fun as Arenas are, I can only play so many games in a week and I can't PUG it like I can in the Battlegrounds. Instances bore me, so I hardly do them. I have acquired almost 500 Stone Keeper's Shards, almost all of them from doing Wintergrasp daily quests.
Players who are no longer looking for drops in Heroic dungeons still continue to do them because it's quite profitable to do so. Should PvP be equally profitable? Probably not, but it should be more rewarding than it is right now. I try to loot every player I kill in a Battleground, as some drop as much as 40 Silver. It's pretty sad. I've read some comments saying that the fun of PvP should be its own reward. That's an odd argument. A lot of people find running dungeons a lot of fun, but fun isn't the only thing they get out of it.
There needs to be an Honor and Marks of Honor dump. It's that simple. Pre-Wrath, there were the different mana potions purchaseable with Battleground marks. There's no equivalent in Wrath. The closest thing to a Honor dump there is are the Greater Inscriptions of the Gladiator, which go for 10,000 Honor. I've bought four although I have nothing to put them on. The next are Star's Sorrow, which cost 1 Gold and 12 Honor for a stack of 20. It's a great drink that's usable in Arenas, but what am I going to do with 6,250 stacks of them?
The restriction that Blizzard puts on Honor purchases is an outmoded idea. It's a legacy of an old system that needs to be revisited. The limits on Honor were there to control acquisition of 'welfare epics', but now that raids are easily done by PUGs, the real welfare epics come from PvE. Isn't putting a ratings requirement on gear enough of a restriction to allow the lifting of the Honor cap?
Why aren't there items like Frozen Orbs or gems, or even consumables purchasable with Honor? How about an Honor-bought version of Lesser Flask of Toughness (I actually use those)? Or Battlegrounds-only versions of Blackened Worg Steaks? Blizzard has been extremely creative with Gold -- and emblem -- dumps in Wrath, I don't see why there aren't better items available through Honor. Hopefully in the great and promising Patch 3.1, they'll look at the Honor system, too.