Cape of the Mountebank Level 5+ Uncommon
Power (Teleportation) Daily (Immediate Reaction)
Use this power when you are hit by an attack. Teleport 5 squares and
gain combat advantage against the attacker until the end of your next
Do you think "reaction" is intended, so you take damage from hit, and then teleport, or is it "a case of mistaken interrupt", like with Parrying Weapon's ability? (here – What is the timing of Parrying Weapon's ability? )
So, how should I rule, damage or no damage?
Yes, it's probably intended. The power works fine - it's like the pixie's teleport trick. It's a reaction, and you take the entire attack before absconding to safety. Even if you can't evade the attack, it's still very useful in the hands of a ranged character: a free escape to safety from someone who closed in on you, and a temporary bonus to attacking them.
It's reasonable to suspect there's a mistake when a power is totally broken, but when it works fine and just surprises you with an uncommon effect, just take it as an unusual (but deliberate) feature.