Since NPCs have an auto-levelling scheme, how does this interact with the Level Cap Remover? Are NPCs still stuck at level 50? If not, what determines where their skill points will go?

See TwoHandedSword's post.

Actually, since the pre-generated characters have auto-leveling schemes which (in theory) continue past level 50, it stands to reason that the built-in schemes do as well. If not, then the points will accumulate on your character screen, waiting for you to assign them. In either case, you won't lose them.