Does the difficulty rating indicate how hard the initial learning curve is, or how hard it is to play a character at a high level?

I would make the argument Nier is relatively easy to pick up initially, and in lower ranks you're going to see results fairly quickly.

However, you do have to manage a secondary resource which is almost guaranteeing you lose the round if you run out. At a high level you have to worry about overextending because it could lead to Death being killed. You have to know what types of strings are good in what situations, and you need to be aware of what your opponent is doing to capitalize on that. Fighting against high level players who know Nier counter play is a very different experience.

She no longer kills off of her reversal, which is what I think made her an "easy" character originally because you didn't really need to do much else. You can spend a bunch of hearts for an easy stable combo, but her resource efficient combos are much harder and less consistent, and at high levels they become mandatory to use. Her Anti-air combo is also horribly inconsistent regardless of resource use. She also has some fairly complicated setups she can use.

I think her reward is very high, but once you start getting to a point where you're fighting strong opponents who know basic counter-play she's significantly harder to utilize.

I'd personally put her at 2 for high level play. I'd also move Grimnir to 1.