It's an alright policy, as far as it goes, speaking as someone who played extensively before joining the forums. Sure, if you prioritize balance above all else, it's a terrible policy, but quite frankly there aren't that many people who do that, even on the forums--off the forums, balance is barely a concern at all, EXCEPT if enemies are too hard. It's a policy that prioritizes customer satisfaction, and most customers aren't going to be satisfied to suddenly see their money items be devalued.
To be fair, most of the NG items in PD's thread have been rare for a pretty long time, several of them are permarare, and others will be replaced with weaker versions once they return to the game in their respective seasonal events.
As for the thread itself, you can probably find it if you dig back a bit. You'll have to bump it yourself, though.
The consequences of balancing...I'm not really sure what your concern is here. What "dissonance" concerns you? Having some stuff much stronger than other stuff? That's already been the case in MQ for years. The only change, here, would be that there would be a lot more other stuff after it's done than some stuff.
As much as you would like it to be, Assault Mecha is not and never will be a big deal, because Mechquest is not and never will be a "true" PvP game, where you can face off realtime against other players, because engine limitations. I'm personally totally fine with this; at a guess, the average player would probably also be OK with it as long as they can play the rest of the game, and to be honest, it would probably allow players to treat PvP as a Challenge Area.
The only exception would be in quests like the Mogloween Find Shelley Quest Chain, where you have to fight other SC players, most of whom have some pretty crazy mechs and items. But I feel like that entire quest chain should be rebalanced anyways--I don't know how you're gonna beat the Terrifi at the end of it with rebalanced equipment.