Dave, storms will often die coming off the ranges for a number of reasons 1) As you mentioned they hit cooler air by the coast thanks to a strong sea breeze, this results in a major decrease in CAPE. 2) Often there just may not be enough CAPE for storms by the coast, remember a T/Td of 25/17 at 1000m is roughly equivalent to 35/19 on the coast, ie at sea level. Therefore, given similiar surface temps and moisture, higher CAPE will usually exist over the ranges 3) Capping, sometimes there will be enough CAPE for storms by the coast however if capping is too strong storms will not form. This was the case in SE Qld on Saturday, where the morning sounding had LI of -4 and CAPE of 900 j/kg. Plotting with the afternoon temperature gives an LI of -6 and CAPE of ~2000 j/kg, plenty of CAPE there. However, even at 30C there was significant CIN so no storms resulted by the coast. On the ranges, the cap was easily broken and there were severe storms.
Michael