In cases like this as a DM, I balance two competing instincts
(1) In general I err on the side of allowing the power to work as awesomely as possible for the players. What would be most awesome? Allowing it to be a separate instance of hit/damage, so it gets all bonuses.
Edit to add: I can afford to let the players be awesome because as DM, I can always use more / stronger monsters in response.
(2) But at the same time I don't want one powergamer at the table to overshadow everyone else too much. (He can overshadow them a bit... that's the point of powergaming, after all.)
So it would depend on the group. Is everyone in the group cheesing out damage, in a good way? Then I will will go with (1) above and let the spice flow... er let the damage flow.
Is the group mostly "normal" and just this one player is mega-maxing? Then I would probably nicely ask him to choose a different power (I might blame it "unclear rules for how this works" if nothing else).
I know this isn't a definitive answer and it means that at my table, there are some rules that aren't rules, but more DM fiat. I'm OK with that.