Dear Mr JAMESK,
Wellcome to this forum.you have plenty of explanation for your question and how you take it all.?
when you collect vibration data using any vibration data collector you will get many unwanted noise along with useful data what is required for fault analysis.The problem is that the identifying signal (useful data) is usually drowned out in other noise emanating from the machine.
Hope you know about FFT spectrum analysis,where in rotating machine faults are identified for example shaft unbalance,shaft misalignment are best detected using velocity spectrum where as bearing defect is best detected in acceleration spectrum (acceleration enveloping) It works by progressively filtering out unwanted parts of the vibration spectrum until the exact signal of the bearing defect can clearly be identified, thereby separating low-level, repetitive vibrations from the noise around it.
""Everything I read states that Velocity is the best indicator of the destructive force of the vibration and acceleration is an indication of bearing or gear mesh fault.But it does make me think of another question, what happens to Velocity readings above 1000Hz?""
so, you can still use velocity spectrum to detect bearing defect but it will be a long way to reach the destination and you are most likely to end up with problems rather than solution to problem