@A2ZOMG: For one thing, you kinda discounted your opinion on GAW by saying you don't approach with the turtle. Disregarding that, though, for the sake of civility, here's my response:
The Dsmash sourspot is not intentionally landed, as you suppose it is ("It's very difficult for G&W to actually land, since you will be stepping inside of most shieldgrab ranges to land that."). It's rather a punishment for approaching. Imagine if you will Ganondorf is trying mighty hard to get over a wall of bair. Let's say he airdodges and lands on GAW. GAW's only really useful option here is to dsmash: Upsmash is too slow, Fsmash might not work (depending on what side Ganon goes to), and his tilts are either slow or weak.
In that case, he dsmashes. Suppose if you will GAW was near the edge of FD, and Ganon was at 60-70 percent damage. Ganon has an infuriatingly high chance of being semi-spiked irrecoverably off the edge. That's a percent that Ganon should be killing GAW at, not GAW killing Ganon at. I noticed this happening far too often when I mained GAW.
Also: Sightly pointless, but to be perfectly clear, I talked about nerfing the techchase from the dthrow by nerfing dsmash, rather than nerfing the dthrow itself (how would that be done, anyway?).
You do make an interesting, if not completely correct, point about the turtle, though. You are right in that the characters who you can charge in without worry would benefit from reduced damage, becaues they have no ability to SDI out of it when they're squarely in the center of the hitbox.
What's questionable, though, is the use of the turtle against characters like Marth. GAW vs. Marth is a very mental matchup based entirely on spacing. Marth and GAW exchange fairs and bairs, respectively. GAW tends to hit only with the very tip of the turtle. This is a situation when it's common to SDI out of the turtle and respond. The question is: Is it helpful or harmful in spacing matchups like these to reduce the damage and thereby reduce hitlag.
NOTE, however, the fact that we may nerf Marth's fair, so it may cancel out.
Concerning Marth's fair: I think that the
base knockback should be increased, and the growth reduced. I was watching a video of Marth Vs. Ness,
http://www.youtube.com/watch?v=x9Twtr-Usjs&feature=related. Starting at 4:46, the Marth looks downright angry, chaining fair after fair after fair. Yes, this hadn't been going on each stock, but it could have been.
On the other hand, the fair becomes annoyingly strong at high damages, sending the opponent far offstage with ease (especially when tippered). See the play starting at 3:00 in that match, especially the tippers at 3:16 and 3:24, to demonstrate its effectiveness vs a character with a recovery like Olimar's. Keep in mind that Ness is much heavier than Olimar, too.
My main concern is: How unbalanced would his "less-good" matchups (he doesn't really have any bad ones) become if my changes were implemented?
EDIT: Also, don't judge the matchup based on that game. Note that it was recorded May 18, 2008, which was less than 2 months after the release of the game.