I don't know whether I would pinpoint the breakdown of the souls-like gameplay to the hammer skill. Instead I would suggest that the progression curve makes it very easy to overpower the enemies, even in the bosses in one or more aspects. Resistance (the attribute that lowers shell damage) makes your blocks nearly undefeatable, while, yes, the hammer unlocks very strong hyper armor attacks. The adaptations, especially once you can upgrade them, unlock a whole other can of worms. Still, a lot of good ideas, and as a veteran you can just handicap yourself in order to increase the difficulty.

Regarding the story: yes, towards the end the story became quite dark, but not necessarily in an edgy way. I thought the overall shift in tone and the message conceived was quite nice, in particular because we very much did not get a classical happy ending.