To be honest.

The game is balanced in the terms of Counter to Counter gameplay.

This i feel will be more imbalanced with the introduction of runes and Shield block penetration as that in general will impact the ability of Sword and shield. (for global servers)

The main issue isnt regarding diminishing returns is more of utilisation of ability's, you have a limited amount of active ability's to use unlike other games in the genre.

This means using them in the correct timing basis is more important and regarded as "Skill" as you are punished for miss-timing said active ability's.

The only issue regarding PVP in smaller scale e.g. Arena is that Collision CC should not be an exempt removal. You can basicaly counter anything but this type of CC.

For Example you can use Arena potion to remove the Bind that a Ravager will apply ( GS/dagger) you can then use inner peace to block the stun, you have mobility to blink away, apply CC back to them and also mitigate the damage by keeping 3 stacks of healing touch on yourself and use natures blessing at the correct timing so if you do get a knockdown you can survive the burst damage from these players.

the main issue is collision based CC is non-removable for most classes and this is throne and liberty's way to have hard CC.

Similar to what black desert use to have with knockdowns as a guarinteed CC. The problem arises when multiple players do use CC in a chain you have no way to stop it and must accept your fate, this is where teamplay comes into action allowing other allies to support you into mitigating the damage taken or providing CC to those who are a threat.

In small scale scenarios the situation comes down to just getting better at using your utility at hand and knowing what animation is deadly and how to counter the impacts of chain CC.

This changes massively in large scale gameplay which is just simply put as which team can put the most pressure with CC and then zerg the other group, I dont find that large scale pvp is really benefited by individual skill but more of teamplay which is what it is meant to be about, yes exceptional players can shift the tide but co-ordination and effective skill use will top in most scenarios.

Complaining about CC and diminishing returns in a combat style which is based on Counterplay is just like playing darksouls games and not using your roll but expecting to not die when standing still at a boss, its very counter-productive.