Do the faction vendors cap at 271 power? My power level is 277, and I can't get over the hump to 280. Ingram are at 271 as well, and I'm getting lower level rewards from milestones.

All engrams, vendor rewards, and normal activity rewards (strikes, crucible, etc) drop at 5 power under your level once you're over 270 (they actually stop gaining power at 265, and then follow you five under as you level up beyond 270). You're likely 276 and change with legendary mods giving you bump to 277 (all exotics have built in legendary mods that grant +5 power), which is why they are dropping at 271 instead of 272.

After you reach 265, you can only get drops above your power level in a handful of ways. The primary source is the weekly milestones that drop powerful rewards. This the Flashpoint, Nightfall, Call to Arms crucible quest, weekly personal clan XP contribution, raid, and Trials of the Nine. These refresh every week and give you drops guaranteed to be substantially above your current power level (to the current cap of 300).

You can also get high power drops from your weekly crucible and nightfall clan engrams. The only other way to high level gear is from exotic engrams, but those only drop marginally higher than your current power.

Exile already mentioned it, just confirming. To sum up: Nightfall, Call to Arms, Flashpoint, Clan XP Contribution, Trials rewards (at 3, 5, 7 wins and flawless) and Raid drops (not the vendor packages, drops only). Nothing else boosts your Power beyond 265 except for Exotic engrams but those are far from guaranteed to drop higher than what you are.

Also (if you haven't yet) do those weapon quests with the blue icons that pop up on each planet after you beat the campaign. I believe they drop higher power level than whatever you're at when you complete them. I did the mida-multi tool quest when in my mid 70's and it dropped at 291 I think in addition to the 277 mida-mini tool for example. I've even gotten an exotic from trading in weapon parts to Banshee-44 as well as heroic public events. Basically just keep doing everything, lol, it'll happen.

Exotic's always tend to drop higher so don't forget you can infuse them and buy back from the vault.

@barrock: Do you have two characters of the same class? I.e. two titans? If so that explains why your power engram (milestone rewards) rewards are so low. Bungie has said they did to prevent people from making multiples to increase power level.

Just one character.

It's unfortunate that such a large portion of the game becomes rewardless. I haven't had the courage to do trials or a Raid attempt, so my options for upgrades are limited to the weekly rest.

Welcome to the grind. This was the same as Destiny, where you were stuck at either weekly upgrades or raid gear only to increase your power. If Bungie made the game to where you level your light simply by grinding tokens, than what is the point of doing the harder content if you can get better stuff doing it the easy way? And to say it becomes rewardless is not true. Even at higher light levels, you still want the tokens for different gear, shards, mods, etc. Your going to have to Join a clan if you haven't already for the clan engrams and than each week, grind out the milestones for higher level gear. Its taken me 3 weeks to get to 298 light level due to terrible RNG on drops.