As the title says. The original armour has a +1 Dex cap, but when it becomes heavy armour it only says it's AC bonus becomes +5 and nothing about it losing it's Dex bonus.
The armour becomes heavy armour. It's AC bonus becomes +5, and it gains the bulwark armour trait.
I would say since heavy armour usually doesn't have a Dex bonus it would disappear, however the closest example I can find of something similar is the Inventors armour invention. When becoming heavy with the modification Heavy Construction it retains it's Dex bonus to AC (however that is specifically stated in its new stats in that instance).
Any thoughts? I'm leaning towards it retaining it's Dex bonus.
Also, more evidence for would be that the Armored Skirt item also specifically states that when making the medium armour heavy to reduce the armour's Dex cap by 1 where as Armor in Earth says no such thing.
Best Answer
Yes
Several heavy armour options like half-plate have a non-zero Dex bonus allowed to AC (and the same +5 item bonus), so there's no reason that this wouldn't work or to suspect it as unintentionally too good to be true.