In 3.02 Zelda's case, yeah, it was totally okay to modify her design after years of development because it was so obvious that it just wasn't going anywhere; in fact it was probably preventing the character from getting any sort of meaningful buffs. Zelda slowed down the pace of so many matchups to the point where people got fed up with the character not because of her "potential" but because of how the way the character made you play the game. It was slow, boring; it honestly reminded me of brawl. Personally, I think that when large groups of people belonging to 30+ different matchups complain about about how boring your character is to play, it's worth listening to. Obviously, listening to the opinions of the uninformed is cancerous to the development of the game, but I don't think that's what happened with 3.02 Zelda and I don't think it's happening with this transform discussion.
You mention counterplay, but the only counterplay for transform is to to learn a completely different matchup of a top tier character that can pop up at any time during the match. I'm in the camp that thinks that this sort of request of players is too much, but I'm willing to be convinced otherwise.
1. Except the only moves that have gotten meaningful buffs since the drastic 3.5 nerfs are Farore's Wind and Forward Throw. Din's, Nayru's, Jab, and lightning kicks are moves that are undeniably worse. 3.02 Din's forced approaches in many matchups and Nayru's served as an alternate means to escape combos and could be used as a pseudo approach. With her poor ground and air speed, short dash dance, and short wavedash, Farore's Wind is her optimal approaching tool, but it's not very good versus faster characters that can punish the high startup or the time between the reappear and Zelda's fastest attack. Zelda is a defensive character. I don't think that's news to any good player. 3.02 Din's, Love Jumping, and Diamond Diving were defensive attacks. 3.6 Beta Din's is only decent for offense and serves little defensive purpose as it's bad at controlling space and can't force approaches. Nayru's Glide works if you can auto cancel it onto a platform, but more often than not Nayru's Glide does not help Zelda return to the stage quickly after she's been launched high above platforms or the stage. Diamond Diving actually helped Zelda recover to the stage quicker, which is something she needed since she dies off the top early and didn't have any other attacks that traded well or threatened much space below her. You wouldn't see or hear Zelda mains on the defensive much if she'd received good compensation for what she had lost. As it stands, almost none of her attacks were significantly improved in functionality or utility to help cover the weaknesses she had in 3.02. 3.5 just introduced more weaknesses by removing her strengths, which largely lied in her special attacks. Her ground and aerial attacks are largely the same except jab (which is pitiful now), f-throw (which was buffed), and lightning kicks (whose effective sweetspots are smaller and kill later).
2. Eh, I can roll with that for now. I'm not a Shielda, so I'm just trying to understand the fuss and its origins.
3. For a beginner, that could pose a problem. For a veteran PM player, it would be a non issue unless they have stuck by a character that goes even with or loses to both. Sheik is much better than Zelda, and they lose to similar strategies. One issue I'd have with the removal of Transform is that it still wouldn't stop the unending complaining about Zelda that's still occuring in 3.6 Beta despite her overall being much weaker than pre-3.5. What do people really want with the character? Whatever it is has little regard for what Zelda mains want or think. I accept that we're a minority, but if she's going to be drastically altered or kept down to appease the masses, then she shouldn't even be in PM. PM is the competitive Smash Bros. game with the opportunity to give characters that have regularly been unviable in the official games a chance at competing with the best. Brawl- doesn't have a big competitive following, so us lovers of forever mid and low tier characters don't have an option to truly contend with the characters we love most in a game with a major following, and I'd consider it a failure if the game's balance resembles Melee, Brawl, or Smash 4 where certain types of characters typically just don't stand a chance.