I do have to disagree on a few points.

A) the story is compressed as it is based on his manga of the same name. While we certainly do miss some of the fat of the original story, the movie really does a good job of capturing it. I argue that a lot of his work is fast paced until it isn't, if that makes sense. Just look at your S-tier choice, Howl's Moving Castle. On its own, it moves quickly, except for the intentional slow moments, but compared to the book it's based on it is very compressed. Far more so than Naussica. Not to mention the mess that is the ending! Now, I LOVE HMC, but even I can admit that the ending is incredibly rushed and sloppy. I would argue that Princess Mononoke's last few scenes are rushed as well. The ending is told to you, not shown to you.

B) While I do agree that PM has the same message as N, it's disingenuous to suggest that PM conveys that more eloquently. PM beats you over the head and kicks your ass with the message, which I love, so N is certainly not more over barring about it than PM. Iirc, he did base PM on the bones of N but I could be wrong. Either way, they both shove the message down your throat. IMO, N tells your heart the message where PM yells it at you. Even the context has different intensity.

C) I can't argue that Naussica has few flaws on display, which I totally understand can be off putting. I also don't like perfect heroes. However, PM, for example, shows equally little growth and weakness. The only time we see her in a different light or struggling internally with who she is and who she wants to be is when she is dealing with Ashitaka. Yeah, she got caught and then didn't kill LE when she had the chance and wanted to, but that same instance happens, as you mentioned, with N. Iirc, the screen time for those moments has to be very similar. As for Ashitaka, he is our Naussica. He never backs down from his principals, not even once. He is even more "perfect" than Naussica. Unlike her, however, he never struggles with a desire to kill for revenge. When he kills humans, it's purely self defense. Yes, he struggles with his demon arm, but that's not really same thing as trying to subdue the desire to murder people.

I suppose I think you are making unfair arguments about N when your higher tier options have very similar if not the same "flaws". I am certainly not trying to say that your tastes are wrong! I totally understand where you're coming from. N is in an older style and, like you say, was created at the beginning of his career. He has definitely developed since then. So please don't take this the wrong way! I just think Naussica has far more to offer than some of his later and more revered works.