Was Tanya legitimately overpowered on her own merit or was it due to the Shroud glitch?
The shroud glitch happened waaaaay after her release.
During her release status her teleports had armor, no recovery and invincibility frames so you could go through projectiles and fullcombo punish them from a huge distance (fullscreen btw), and you could create so many combos out of teleporting because of no recovery, the teleport cancels were plus as hell with almost all strings, so you can pressure the hell out of your opponent to death, and they couldnt even do anything to you.
In the Pyromancer variation, you could just cause a light show in the stage, you getting caught was nearly impossible and you would just spam the fireballs in the air with your eyes closed while your opponent was breaking his controller
In the Kobujutsu variation, which remained probably the strongest variation in the game till the Kombat Pack 2 (after the general nerf to her teleports), you could just pressure your opponent to death with plus frame cancels and spam your bars like nothing as they would regenerate in the blink of an eye when you keep pressuring
In the Dragon Naginata variation, because of the broken teleports you could inflict TONS of damage and be the most agile character in the entire game
so yea in CEO (i guess its true) everyone was playing Tanya, all of her variations were top 1