I can't speak for Balanced and Possesed but I've played Kenjutsu a lot and I think most changes to make him competitive are on DB1:
- The damage penalty is currently 0.85 and then another of 0.8 for a total of 0.68
2 damage penalties on a single hit, specially one that is HARD to connect into a combo, makes ZERO sense. Most launchers range from 0.8 to 0.85 and are way easier to connect.
- It should be easier to connect a combo. Make it like Balanced rising karma so you have to use stamina for a small run, but you should be able to connect a 4,3 combo from it.
- The hitbox should be bigger to be a reliable antiair. Right now it's worthless to try to antiair with it.
- If they have to compensate by making it the most unsafe move ever, I don't care, I will be careful when using it so go for it and make it -10000000 on block. Kenjutsu needs this move to be useful.
Make all these changes to this single move (in other words: make the move what it should've been instead of a piece of crap hard to connect and applying a titanic damage penalty that prevents you from breaking the 30% barrier without meter and makes spending meter worthless as the increase will be scaled down a lot) and suddenly Kenjutsu jumps into the competitive scene without being OP.
I would try to make B2 better too, at least to make all VARIATION EXCLUSIVE moves worth using. I think with how hard the animation seems to hit, it should be neutral or even plus on block. Being soooooo slow and with worse properties than F3 or spinning blade, there is zero reasons to use it right now and being plus on block would make it at least not crap even if you wouldn't use it too much because of how slow it is.
Maybe make it launch like Quan Chi's hold B2. But I really think that applying the mentioned fixes to his DB1 rising blade would be enough to make him decent and competitive.