Starting DPS seems to be around 152 for the silver sword. I'm currently level 25 with 1540... and there is at least another 33% growth before the end game (based on diagram stats I hold).I don't like the item scaling, but stuff like that can't be considered in isolation, it's part of the overall power scaling.
I strongly dislike the kind of exponential power progression, where gaining N levels makes you A[SUP]N[/SUP] times more powerful. This leads to silliness like a high-level item/creature being 50 times more powerful than a similar low-level one, which makes absolutely no sense, fantasy world or not. But more importantly, while it seemingly makes it easier for the devs to balance encounters, in reality it just completely screws up the impact of both difficulty settings and player skill, because any difference in either can be made up just by leveling up a couple of times.
I feel like loot and power progression have been totally blown out of proportion in modern RPGs, and because of that, the players have been forgotten. It shouldn't be just the main character's power level that unlocks access to late-game content, but the players getting better at the playing the game. And this requires that there's vastly less drastic difference between a high-level character and a low-level character (or item or enemy or whatever).
Just in comparison: in Baldur's Gate 1, a basic sword dealt 4.5 points of damage on average. A totally awesome, end-game sword would deal maybe 7.5 damage on average, that's a difference of 67%. I don't even dare to calculate the difference in TW3, we're talking about completely different orders of magnitude.
Steel weapons are even worse... the starting gear is *far* weaker than the dross that I sell for a handful of coins every time I fight bandits. (Silver has grown about 3x, with the rest from skills, while steel is around 8x growth).