....Spaw enters zipping his fly and singing "Loo-ie, Loo-ie"
Rick has a fantastic system for dealing with capos that he has described several times here before (and above). Its especially important that the radius comes as close as possible and that you use a damping material as hard as possible without damaging the strings. There are some other fine tips in the threads that Justa Picker linked too.
It is inevitable physical law that sound will change as a string shortens. I'm sure you done some things capoed wellup the neck, just for the tonal effect. Consider what I said above also in simple terms about "losing the effect of the nut." This though should not be significant as you seem to describe and I would also ask your repairman to take another look at the saddle to be sure the fit is tight and the bearing surface is adequate without being too wide. Then redo your capo and try this again. I think your repairman will probably have a good look at things like neck relief at the same time, especially if the sound deteriorates worse on the lower frets than the ones from 5 on up.
BTW, since Susan has "made nice" for you Jeepster, I guess we can still be buddies. So on that basis, here's a fun thing to look at. Frank Ford at frets.com (a GREAT repairman/luthier & a fantastic website) has some capo pictures that you'll really enjoy. The first time I saw those pages I laughed myself to death, but you'll see a lot of them out there. I bet Rick, in his capo collection, has most of them. Click Here for Capos (and other torture devices)