That's how PAYG has worked everywhere for a few years - and it will be more than £5 in the peaks. It shouldn't deduct another entry charge if you have come directly from the underground though.
There was a time when the max cash fare on entry was higher for some NR services than TfL's equivalent, and at one stage the literature about Oyster PAYG seemed to suggest this charge was mainly a NR thing, but LU did charge a max cash fare as well.
AIUI the original PAYG system didn't charge a max fare on entry - but this was fixed after a while, MikeWh might know the exact timescales I expect...
Yes, the original system when Oyster was first rolled out to the Underground did not include a maximum fare deduction. It was introduced when they saw how many people from 'open' stations only touched when they needed to operate gates. I don't know when it changed, sorry.
As far as I know the maximum fare within zones 1-9 is always the same. There are different (higher) values at Watford Junction and the Grays area. Otherwise it is the relevant (ie peak or off-peak, discounted or full fare) fare for a 6-zone journey using both NR and TfL in zone 1. If you have a travelcard season loaded then the reduced maximum fare when touching outside the zones covered by your season is a zones 1-4 journey using NR and TfL in zone 1. I believe that this has been the case since Jan 2010.