I did a bit of research and found that this is related to a property in Box2D called b2_velocityThreshold. Basically what it does is if an object's velocity is below the threshold it will treat it as having an elasticity of 0. After some quick testing it appears it occurs if the velocity is less than 50 (for the perpendicular direction at least).
Is there anyway to modify this value in C2, or get around it by modifying other physics properties? I can create my own collision events if absolutely necessary, but I'd prefer to stick with all physics. I'd like the object to bounce even if it is moving very slowly, only coming to a stop once the linear damping causes it to.
Link to capx
Thanks for any info/ideas