This glitch is nowhere near metagame changing as one may think. Diddy Kong may be immune to grabs, but that does not mean he truly benefits from this. This actually would make it more easy to punish Diddy Kong since he can't use shield in order to keep the glitch. It's more of a risky tactic than a beneficial tactic since Diddy Kong will be easy to punish. Now if it had been a full attack-immunity glitch, Diddy Kong would definitely need a ban, but since this is a grab-only glitch, and Diddy can just be KO'd or needs to shield, then surely it's not beneficial at all since he should rely on shield.
Also, let me list the characters who definitely aren't affected by it:
![Ganondorf :4ganondorf: :4ganondorf:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Roy :4feroy: :4feroy:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
Then the ones not affected by it much, but can still (possibly) activate the glitch:
![Ike :4myfriends: :4myfriends:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Little Mac :4littlemac: :4littlemac:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Link :4link: :4link:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Luigi :4luigi: :4luigi:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Mario :4mario: :4mario:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Megaman :4megaman: :4megaman:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Pikachu :4pikachu: :4pikachu:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Sonic :4sonic: :4sonic:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Toon Link :4tlink: :4tlink:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Villager Male :4villager: :4villager:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Yoshi :4yoshi: :4yoshi:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Jigglypuff :4jigglypuff: :4jigglypuff:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
Debatable In-Betweens:
![Marth :4marth: :4marth:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Lucina :4lucina: :4lucina:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Olimar :4olimar: :4olimar:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
![Shulk :4shulk: :4shulk:](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
The rest are still hit pretty hard by the glitch with their grab games being hurt. I added Little Mac to the secondary list only because his grab game is not really used that much, and he has far better options; plus, I'm sure Diddy would NEED to shield against any of his attacks.
Now Ganondorf is the only character who can't activate the glitch, to my knowledge, since most of his attacks (which are practical) are single hit attacks, the only double hitting one being N-Air. (I know that he has D-Smash, but if Diddy shields, he'll only be hit once in shield). Wario has D-Air as his multi-hit attack, but a practical Diddy will probably dodge. Roy has a multi-hit with the Side Special Down 4, but Roy might not use that.
The other characters below don't necessarily have anything wrong with them without their grab game, even though they may be affected by the glitch. They have far other setups, like I explained with Little Mac.
I don't see this glitch being considered broken because Diddy players, smart ones, would raise their shield instead of being combo and KO bait all the time until their stocks end. This glitch, much like Pac-Man's Trampoline glitch, isn't game-breaking in any way, and Diddy Kong is still within the A Tier (not S Tier).
Tournaments don't need to ban Diddy, because if the glitch is used, Diddy is in more trouble than you might think, since he can't raise his shield in order for the glitch to work. If an opponent goes for Diddy with an attack, a good Diddy needs to dodge or shield. I'm sorry, but this is nowhere near to ban state and TOs are overreacting with the glitch, and many other people are DEFINITELY overreacting with the glitch.