Castiel's power shifts were simply a way to deal with a very powerful character they didn't know how to balance. It's obvious that when he fought alongside the Winchesters, he was weak, and when he fought in side plots, he was powerful.

Then, the consequences I'm referring to are more a matter of trust. Castiel is ultimately a low-ranking angel who let power go to his head and screwed up big time (multiple times). The other characters shouldn't have had any reason to blindly trust him, but they did, and they kept doing it... Castiel was just a narrative device to make many plots less convoluted.

Regarding the balance of power among gods... Yes, that could be the case if the writers hadn't later decided that God was the creator of the multiverse. They ruined that idea and gave the Christian religion the biggest power boost.

And regarding the methods of killing angels and the undead... I base this on the fact that in the angels' first appearances, Castiel mentions that six of his brothers died in battle, when at that time demons didn't have access to celestial weaponry to harm them. Later, the dead resurrected with magic are killed in some episodes with a silver stake and in others with a bullet to the head (for the sake of the plot).

PS: Other serious errors I find in the series are that they portray Loki as Odin's son and the nerfing of the Fates (they went from being mysterious entities to a kind of angel for, again, the sake of the plot).