I have the answer. The following was cast on me by a previously VL level 500 player:
02:35 21/Jan/2010
[ Ignore ] Player ***** activated the skill 'Deflect' (Level: 175) on you.
Therefore, it appears that as long as you have reached a certain level to allocate skill points to a skill, and as long as you do not fall below the skill level required to CAST said skill, you retain the casting value you had at the previous virtual level. Is this a correct deduction, Mr. Hoof?
Seems to be dale, its just that if your VL is 200 persay, and you have reached level 500, you can cast a level 175 conserve, (provided that you put 150 points into it at level 500) but you can not cast a level 175 death dealer, no matter how many points you have in it.