Any advice you could give me as the host, to either mask losing occasionally, or improving the skill level of my attendees?
Similar here for my home game: lots of recreational players, and few people who want to learn. We're 18 months in and most still don't know the oversized chip rule. But these are my friends, and I love playing with these hooligans (it's my favorite night of the month).
Personally, I am not a fan of capping your play, but that is up to you. My feeling is it's not right to chastise someone for "playing bad" (as long as they're not holding up play). Why should you be be chastised for playing well? If people buy in, they should be able to play how they want to play.
My advice would be two-fold:
FIRST: Make the stakes the cost of an average night out on the town. They shouldn't be "nothing", but they should be the cost of dinner and a movie/concert. The exact cost of this will depend on your season of life. Are you in college? That could be $20. Are you middle-class professionals? That may be $50-100.
I believe this is the most imortant thing to a casual home game. People will want to win... but even if they don't, they paid $50 to play poker for a dinner, and a few hours of good fun. They would have spent the same amount of money (if not more) going out on the town.
SECOND: Make alternate ways to make money outside of the prize pool. For my game, the buy-in is $45 total. That's $30 to the prize pool, $10 for a bounty, and $5 for Bad Beat. I offer one $20 rebuy to the first break, and a 5K add-on for $10 at the first break. The most someone can lose is $75 in one night.
The bounties are $10 per knockout ($20 on the previous month's winner), and the Bad Beat is $5 per player, winner take all (it ends at the second break). With 8 players, winning the Bad Beat can be $40, which is nearly our full buy-in amount. With the exception of maybe one game, each winner of the bad beat has not made the money that night.
With those two items, it keeps the recreational players not so much caring who wins or who loses, as long as they're having FUN... even fun while losing. But it's also not SO low stakes they're playing like total maniacs. I have won 3 months in a row once, and other people have won 2-3 times in a row. No one has ever complained.