Yeah, a similar thing happened again. Damage was at 5, I get the +5 for one level and it's at 10, then I don't have the exact damage rating, but two levels later my shots do pretty much nothing, so I'm reasonably sure that it applied -5 damage on each level.
Cool little game, though! I don't know if you're still interested in doing updates, but that bug is pretty frustrating. :)