Sorry, Mike, but I disagree with your assessment of the scarf joint over the post. That's exactly where it belonged. Any other location would have, in theory anyway, made for a very weak top rail. The cap rail is supposed to be able to withstand a specific weight/force applied to it laterally. For example a 250 lb 6' tall person falling against it. In order to withstand that, the weight has to transfer directly to the posts. Any kind of midspan joint would compromise that strength.
Installing a piece of waterproof membrane on top of the post, under the cap-rail would have given better long term protection, as would better annual maintenance.