I'm finding the replies in this thread really amusing considering how different every matchup in SF4 feels when compared to Injustice, MK9, or even Marvel. I'd ask the question "Watered down compared to what?" I think you're mistaking nuance for something entirely different.
Also regarding your "example," just because someone is a specialist with someone doesn't make that character either good or balanced. Anyone who's been playing fighting games for any decent amount of time knows this. Reason we have such a varied top 10-20 in SF these days is because the game has been out so long and people have had time to discover the tech being used and polish their personal gameplay and skill. Also some of the characters mentioned were direct counterpicks in your list. Go ahead, try using Hakan in a character-lock tourney and see how far you go with him. Not happening unless you are one particular player or another. That's player skill, NOT game balance and not to be confused with each other. Just look at Makoto in your list. Haitani is going to beast with any character he plays due to his own skill. If Makoto was so "balanced" she would be viable for ANY player with a decent amount of skill to pick up and do well with if the game was as "balanced" as you think it is.
This is mind boggling and self contradictory in places but I'm gunna try to unravel the mess. So, your first point is that if someone decides to specialize in a character and thereby shows it to be viable, it doesn't necessarily mean it's balanced, despite that being pretty much the sole metric by which to judge balance by. This really is kind of nonsensical. So only generalists who use a variety of characters should be considered when judging the balance of a game?
Your second point is that the game has been out for 5 years and people have managed to make a ton of character's viable through practice, which in your opinion doesn't signify balance. Well, okay.
Then you mention Hakan and say he can't get very far in tournaments, unless you're a specific player and then he could maybe get far in tournaments -- your point being what?
Then you basically say that balance doesn't matter and that it's all about player skill, so why are you even talking about balance to begin with? If most characters would be viable in the hands of a highly skilled player, then that's also not balance in your opinion. What is balance, then?
Your next point implies that Haitani flew to another country and competed at the biggest major with Makoto on a lark, not because it's the character he felt he had the best chance of winning with. This is insane, but okay.
The last point is some sort of appeal fallacy, and claims that to be balanced a character must be viable in the hands of "ANY" player. You're basically arguing against one of the most fundamental tenets of balancing competitive games: You don't balance for the pubs, you balance for the professional scene. Players happen to have different strengths, and some characters are very difficult to use for even relatively skilled amateurs due to the execution and reactions required to play them effectively, but shine at the upper echelons of play. Apparently this means it is unbalanced? I don't think you get what balance is.
What do you believe balance is? Because you said it can't be judged by specialist players being very skilled with their character, then said it was
primarily player skill, and finally turned a 180 in saying that a character being difficult and requiring skill means that character is poorly balanced.
TL;DR: are you okay? you seem vaguely confused.
Not much different from Scorpion's infamous Injustice shenanigans, even when not "too powerful", the matches still end up playing like crap.
Seth is a really technical character that requires smart reads and prohibitively high execution to be viable. There's a reason you don't hear complaints about him from anyone but bad players, and comparing him to Scorpion betrays a lot of ignorance.
Yet how often do you see characters like T. Hawk and Honda? and most of those characters are in the Top 20 bracket outside of E. Ryu.
T.Hawk and Honda, so there's two characters out of the cast. Except Mike Ross has placed highly quite a few times with Honda despite getting knocked out early this year at EVO. Pretty sure there were also two Hondas in top 8 at EVO a couple years ago, as well.
What do you mean by top 20 bracket? You mean tiers? So a ton of viable characters in a tier list is also not balance. Nothing is balance.