Herzog said:
In my opinion, Power Attack will be used against low AC, high hp enemies. It's a tradeoff between chance to hit and damage dealt.
I agree with this analysis.
Combat Expertise will be used against enemies with a low AC and high attack bonus.
Since you are reducing your chance to hit to reduce the chance of your ememies hitting you, you are effectively 'dragging out' the combat.
But I disagree here.
While you exchange BAB with both feats, you want to hit when you PA, and often when you Combat Expertise, you're simply trying to survive; you may want to simply block passage, or protect someone, or keep a target from escaping; hitting is not as important to you. Because hitting's importance is reduced, or a non-issue, you will want to have as high an AC as possible: further reduction of your attack bonus ceases to become a drawback.
Actually, you could argue that Combat Expertise with out a cap experiences increasing returns to scale: because you have such a little chance of hitting with a -10 penalty to attack, there is not much additional penalty to accepting a further -10 penalty; however, a +10 bonus to AC and a +20 bonus to AC is an incredible improvement in defenses.
So there's your reason:
As you increase the attack penalty from 0, Power Attack approaches optimal and then reduces in effacasy while Combat Expertise only ever improves.
Since the important difference is the fact that your AC improvement is against all enemies, does that mean that if (bordering houserules here, sorry) I would introduce an option to use Combat Expertise against 1 opponent only, in that case I could drop the cap?
This would indeed make a difference, but not as big a one as you may think. It is not objectionable, however. Though I doubt very much if you will ever see anyone not take a full CE penalty-to-AC.
I'm not completely convinced yet.
Do you understand the argument for the cap, even if you don't agree with it?