Some people on reddit who were able to look at the game's code think that the hard cap is lvl. 40, but we won't know for sure until somebody hits that. If someone spends that much time on the game, then yes, they will probably be able to dominate the gyms in their area. However, it seems like even gyms with absurdly strong pokemon in them can be beaten by a trainer with a half-decent team who knows how to dodge and use type advantage, so the system isn't too broken in that sense.
CP rises approximately with respect to sqrt(level), so trainer level 5 is to trainer level 10 as trainer level 10 is to trainer level 20. There's also very sharp reduction in CP/level from pokemon level 60 (trainer level 30) onwards; it almost halves. Basically, once you reach level 20, you can be competitive anywhere, pretty much, because you've hit the game's first soft cap, and once you've hit 30, there's not even that much point to levelling any more, because you've hit the second one.
Yeah, my main worry is that people would just abuse the XP doubler to get to a really high level, to a point where they could pretty much just generate Pokemon that would outclass anything trained by more casual players. It's interesting to learn that the soft level cap is relatively low (20). Is there a Reddit post where people have worked all of this out?