My armor rating at the moment with thrown together gear is almost 500

When i eventually get to a higher level and buy another perk it could and should be 1000 without exploiting

Is there a cap?

I know there is a 85% cap on elemental resistance and magic resistance but what about armor value?

there is a cap somewhere between 550-590, dont remember exact value, if you will fully invest and perk smithing and your armor skill, you are better picking light armor because you hit the cap with full dragonscale armor w/o shield and 100 smith upgrade (legendary) because you get stamina regeneration and spend less perks than heavy armor.

It caps at 567 displayed armor rating; this is 80% physical reduction.

I'm curious, the lord stone gives 50% physical damage reduction right? Does that count toward you armor rating cap?

There is no way to get 1000 armor without exploiting.

Full Daedric Armor including shield (legendary) nets 777 armor at 100 armor rating with the right perks, no enchants or potions.

The point where armor hits DR (diminishing returns) is around 650 something. So anything past that is a waste.

The benefit is being able to wear any armor you think looks best, as long as you can get it above 600 (which is the cap I think)

Yes, making it easier to hit the 80% mitigation cap for physical damage.