Dennis:
Check out http://www.westsail.org/westsailFAQ where we have multiple stories and write ups for the caprails over the last 7 years.
I can't comment one way or the other on the proposed replacement caulk -- you just don't want to ever do it again:)
On Pygmalion - I am now epoxying the joint flush and using SIS 440 in a thin layer between the now flush joint and the cap rails...
Check out the Dave King - reglass the whole area and use just an eyebrow of teak on the outside.
Jay