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Does limiting speed reduce the power of an eBike?

Well...  in a way, the answer to this question is No & Yes both!

If you are limiting the maximum speed on your eBike (from its original capabilities) due to regulatory requirements the bike will still be able to deliver the same low-to-mid-end Torque but as it approaches the maximum speed it will start reducing the power delivery.

Practically, this means that you will still be able to climb that steep hill albeit at a reduced speed. On a mid-drive bike, you would be able to climb the same hill at nearly the same speed (limited to max set speed) as an unlocked bike with proper gear shifting techniques.

Near to the set Maximum speed and at the Maximum speed limit the motor's overall Torque & Power delivery will be reduced marginally.