Being hit capped only prevents you from missing with your spells. Spell penetration helps with that.
I'm referring to 100% resists (aka misses) with my spells, where I do 0 dmg. It just seems weird that I can do 0 dmg to a level 68 mob when I'm way over the hit cap for the mobs level
Yes, exactly, it's TBC mechanics.
Also some mobs may have frost resistance and some additional resistance based on lvl difference (which cannot be ignored by using spell penetration gems/gear).
But your frostbolt is so called binary spell which means that it can't be partially resisted. I'd say that's a good thing.