1. Do not adjust ratings based on performances of prior opponents.
Maybe Schmke could verify what I am thinking, but I don't think they can do 1 because they have a floor and a cap in ratings.
I don't know that adjusting based on future performance of prior opponents has anything to do with the floor and cap.
The reason to do such adjusting is to give consideration to a result against a mis-rated player affecting your rating inappropriately, the idea being that if you lost to them when they were a 5.2 but after a few matches they were a 7.7, that loss was not nearly as bad as it seemed. If you don't do the future/prior adjustment, your rating is unfairly dinged. It can obviously go the other way too.
Of course, you can go to far with this future/prior adjustment as they very well may have been a 5.2 when you played them and have improved since then to become the 7.7, and giving you credit for them being a 7.7 could be inappropriate too.
There is probably a balance in there somewhere, where exactly UTR is on finding the balance I don't know.
I do not do any such future/prior adjustments in my ratings, other than what I do for year-end calculations, and I believe the USTA does something similar. But the algorithm I have used for doing ratings for football does have a future/prior factor, although the effect of the result against a prior opponent diminishes over time so if that opponent ends up being a lot better than they were when you played them, there is some effect but not too much if it was the first game of the season and we are now in week 16.
All of that has nothing to do with caps and floors. I think they have caps and floors just to provide consistency of a sort, e.g. knowing that 15+ means a pro, and 16+ a very top pro, the best recreational players are somewhere 8-11, etc. And you have to have a floor lest things go negative which would look bad.
Now, could some consistency be realized without a cap? Probably, an artificial cap does seem unnecessary, but they seem to think they need it for some reason.