It seems that something in upstream Chef broke setting the verbosity level. I'm guessing chef/chef@c1440a6 has something to do with it.
Thanks for reporting this. I actually had this happening originally and figured out how to make it go away, but I think a capistrano-chef release (maybe from pull #12) broke it. I can look into it and get back the original behavior.
Set chef verbosity directly. References #13
Opened a pull for this. Will merge shortly unless anyone notices problems.
Should be fixed now. Please reopen if you still have problems.