Yups; very much possible to cap avoidance completely. I'm not sure about the vengeance mechanic, but hey.
It's to do with the level-jumps in item value compared to actual character level. When I had just entered Pandaland, before hitting 86, my DK was sitting on over 60% avoidance. And then it all went downhill pretty quickly. That's just how it is with the system. It's not a bug; it's an unwanted side-effect of a system set in place to manage end-level content and gear increases beyond level sixty. It's related to the diminishing returns and all that.
Using it to down a lvl 90 raidboss at 80 in a solo encounter is... Well; it's an exploit of that side effect, sure. But sooner or later, someone would put two and two together, do the math, and get this done.
That's not to say it would be easy, though. With a small health pool and portions of magical damage, most encounters will pose quite the challenge.