I will try to answer all your questions, please feel free to fix me anyone
1)Skill levels do not follow as you breed through generations, right. So, if you breed 2 pets with 120 wrestling for example, babies will have a cap of 100. There is a few exception in this though.. Like ancient fire steeds, they can have any skill (except anatomy) from 120 to 200, naturally. (I even saw an ancient fire steed with 200.0 meditation for example)
2)Armor rating doesn't follow too, you shouldn't increase it before having a maxxed out pet. (Remember, you can increase armor rating by paying with ed, 1 armor rating=1ed)
3)Max level for babies have a calculation, including a random amount as well. It works like that as I know: (Parent 1's max level + Parent 2's max level) / 2 +1 or +2 or +3. So, if you breed a 30 max level pet with a 20 max level pet, babies will have 25 +1 or +2 or +3 random (26, 27 or 28). And it will be the same for both of the babies. Since they get sterile immediately when you take them up to 41, there is a limit of 40 max levels while breeding, that means if you breed 2 parents with 40 max levels, you will get 40 max level babies again (to give you a chance to get babies with breeds and continue breeding them).
You can always send me a PM through forums or ingame, I will do my best. Good luck