When comparing these two items Mantellian Smuggler's Tunic and Spec Ops Jacket, the only visible difference is 113 armor. Is it just me, or is there very little point in upgrading these, rather than just changing mods? Are they intended to act like heirlooms in WoW, or do they have level caps on mods?
Orange items are items that can be modified with various mods, like lightsaber hilts, armor, augments, crystals, etc.
The order is:
Note that orange is not in that list. Orange just means you can modify an item; it does not indicate a specific rarity level.
Some orange items have base stats included in them, some do not. The whole idea behind the orange items is that if find gear you like, you can keep upgrading the mods to keep upgrading your stats as you level, but allow you to keep that same armor/weapon type.
There are no level caps on mods per item, as long as you have achieved the requisite level for the mods.
Regarding inherit stats with orange items: We have been granted more knowledge by the SWTOR devs. See the answer at http://gaming.stackexchange.com/a/45457/1134. In short, yes, there are inherit stats to fully-moddable orange items... but not exactly. See that link for the confusing details.
From the official forums:
Orange items are customizable with mods. They have no stats of their own, and are designed to allow you to keep a particular 'look' for your character even as you upgrade your gear and improve your stars. Putting in level appropriate Armoring will increase the base armor to the right level, and between that, a Mod and an Enhancement, the item can have exactly the mix of stats you desire and be equivalent to the drops, quest rewards, and crafted items you'll come across.