Poking my head into this discussion.
When you guys first started talking about how Zetterburn's recovery was bad, my initial impression was less that his recovery was not as down-right no-good as it seemed like you were suggesting and more that off-stage punishes are just a very powerful mechanic in this game. That seems to be the conclusion you guys have arrived at. I know for sure that Zetterburn, Forsburn, and Kragg (maybe Wrastor too with next build's D-Strong change, we'll see how effective it is) have very reliable, low-risk spike moves.
Whenever people started getting their hands on Smash 4, certain mechanics were deemed OP like rolling and Little Mac, and it wasn't too long before people began to adapt to those mechanics and find out that there was counterplay to them. I would say to just let the metagame develop for a bit and see how people adapt to the potent edgeguards that are all the rage right now before swinging the nerf bat, but obviously that's hard to say without organized multiplayer being a thing yet.
One thing to note is that with the next patch both hitstun and knockback are being reduced. Try ZBurn out after the patch hits and see if he feels as helpless as he currently feels and see if off-stage punishes are still as crazy as they currently seem.
I think you raise a good point about how good charged Neutral-Special is in ZBurn dittos, can't really think of what you'd do to change it. One ditto out of all the game's matchups seems so niche to change the whole move, especially when it's not nearly as useful in other matchups. Maybe reduce the speed at which N-Special comes out so that the recovering ZBurn has a window of opportunity to bait it out by air-dodging when they suspect the edgeguarding ZBurn will unleash it? You could also make it so that way after once he's charged it enough to make the large explosion, ZBurn will automatically release it, so that way edgeguarding with it takes more skill, but there should probably be a buff to compensate. Either way, it's a really niche ability and I would understand if it wasn't changed that much.
Honestly the first thing that comes to my mind when I think of edge-guarding being too powerful is how no stage in the game offers much for characters who are more susceptible to edge-guards (besides I guess Aether Rock Wall). When you're off-stage, the way you re-approach the stage is more or less the same for every stage. Even Treetop Ledge is, functionally speaking, just another flat platform stage with platforms above it. I would hope that at least one of the as-of-yet unfinished stages there will be more interesting ways to think about being off-stage. Even something like the barrel under N64 Kongo Jungle is, well,
something.