Not only Fire Knight, but all dungeon bosses above lvl 20 have a damage cap to damage based on enemy max hp. That is the case since dungeon levels higher than 20 were introduced to the game.

This must also apply to Champions like Zavia and Elenaril who do damage based on stacked poisons? My Zavia can only get 187k hits above lvl 20, while getting 2mil. damage hits at lvl 20.

Poison damage is based on enemy max hp. Champs like Zavia activate poison. So yes, this affects Zavia as well.

Still a great champ for FK: triple hit A1, and even with the cap, she strikes for 10% of the enemies hp.