[thejeff]

I'd assume it doesn't start lowering until no longer exposed. Or possibly, lowers but then is boosted again. AoE probably shifts around each turn.
I'd assume the +5 limit applies to the cumulative effect of multiple standards.

Though a morale bonus is always nice, where they're really effective is against fear. If a unit's morale has been lowered, a standard will keep boosting it back up until it's back up to base + standard effect.