You see, I am successful in logging in. However, when I select my character with the IGN 'Karasuhime', after the game loads, the game just crashes with 'Onigiri.exe has stopped working'.

However, when I create a new character, I can enter properly.

Is there any way to go about this crashing problem? My main account has effort put into it, and I really don't want it to go down!

Also, my character was last seen as Level 15 in the Izumo area. Were level caps recently introduced or something?

Probably the Kikuzou glitch. Refer to the kikaigahara crash thread for details.