I am still unsure if it is levelled, I just hit 70 in 1 handed, and the damage displayed has gone from 19 to 20.
Displayed weapon damage is affected by your skill in that weapon type and perks for that weapon type. You just increased your skill in one handed, so the damage displayed for that weapon went up. These weapons do have a "base" damage but what is displayed is how much damage you will do normally and at the present moment with your skills, perks, magical equipment (some gives bonuses to one-handed damage), and active buffs/potions.
well after reading this bullnyerk i went and CHECKED the entire weapons rack in the testinghall.
you are LYING. dawnbreaker it not levled loot there is only one dawnbreaker in the rack. neither is any other artifact. please never ever post such nonsense again. gosh. i would quit skyrim forever and hand it right back to the shop i bought it if this was true. leveled artifacts. now that would have been the KING OF NONSENSE. it would actually force you to powerlevel your char.
A few items are levelled yes, but unlike in oblivion (where most of the named magical items were also levelled as well) the variation for many of them is less severe across the different versions. Daedric-prince artifacts and many other magical items are however not levelled and most items - besides artifacts - can be improved by smithing. Daedric items not created by the player are extremely rare compared to past elder scrolls games. Many players will never find more than one or two they did not craft themselves. It is then somewhat understandable that they will be quite good even when compared to named quest rewards.
Your attitude towards those offering help - even if it is not to you personally and even if they are mistaken - is pretty vile and completely uncalled for. You are getting far more worked up about this than can be considered reasonable - both in your first post and your response since then. You may wish to take a break and consider whether flipping out over a game design decision or insulting and accusing people trying to help you over a misunderstanding about a video game is at all reasonable or appropriate.