If the descr_campaign_db.xml file is being correctly used, then there definitely are caps.

Code:
   <religion>
      <max_witches_per_region uint="1"/>
      <max_witches uint="20"/>
      <max_heretics_per_region uint="1"/>
      <max_heretics uint="80"/>
It remains to be seen how or if that has an effect on their rates of showing up though, at least as far as I know.

The values I was talking about having an inverse effect to how you change them were whatever settings Carl has stumbled into in the files, which I've seen mentioned numerous times, mostly because they also include the rebel spawn rates that many players want to modify IIRC (though some of those discussions have been about heretics and witches too). I haven't seen any definite formula that tells us exactly how those settings are applied in the game yet, just the repeated observance that higher is less spawnings, and lower is more. Thus tweaking those entries looks like it may be a play-by-feel proposition. If the equation is simple and the entry is just a denominator as has been suggested then one might reasonably expect that dividing it by X results in the given agent spawning X times more frequently, though again I'm just speculating and there is no evidence at all to that effect.