i'm not sure (Laz would be the expert on this matter) but from what i understand, Music 1 is seen to be the more modern course, and the candiature is larger (about 4500 compared with a candiature of a little over 300 for Music 2) and therefore the competition is greater. Due to the fact that you don't need to read a note to do Music 1 either, you get a few dropkicks doing it which therefore lowers the calibre of the candiature.
Therefore, its not so much a matter of it being capped but when the Board looks at the subjects a Music 1 student is likely to take (generalising here, but say General Maths, Standard English etc.) they then don't view Music 1 in the same light as Music 2 or Extension and therefore, yes are likely to not scale it as well as Music 2. However, saying that, if a student does very well in Music 1 it is just as possible/probable he will do as well as a Music 2 student did.
BTW. don't beat yourself up about the fact your school didn't offter Music 2. Its a really hard course, melody dictations involve writing violin parts out from ear etc etc. :s (I do Ext.)
Laz would really be the person to explain properly but thats my understanding of the situation with the two music courses...