My biggest reason for not playing D-mod heavy is that Degraded Engines seems very common (almost every black-market D ship I have seen, and the majority of recovered ships), and it is a killer--the burn level reduction means that it is very awkward on ships not already above your target fleet burn level (requiring Augmented Drive Field), and the combat speed reduction is a big issue on many ships.
Is it actually that big a deal? I keep feeling like an extra level of burn here and there doesn't matter quite as much as I see players expressing they feel it does.
I mean, Sustained Burn and E-Burn almost qualitatively override it, and especially if AI fleets are also dealing with degraded engines in many of their fleets...
Granted, I have not been playing very long, but in my limited experience: emergency burn frequently cancels out--it can help catch or avoid a faster fleet if you catch them with it on cooldown, but in general I cannot reliably catch a fleet without a speed advantage or escape at a speed disadvantage. If you are hunting Luddic mining fleets, dropping a burn level is not a big deal; with a newish career trying to avoid fast destroyer fleets, dropping to 8 from picking up a destroyer with degraded engines definitely makes a difference.
Sustained burn (especially with the skill boost) does negate the travel-speed disadvantage, so if you never want to initiate combat and are strong enough to fight whomever catches you (plausible for mid/late game exploring) I agree it is not much of an issue.
E-Burn cancelling out each other is important point, yes.
It's not too important to have the strongest fleet overall - but being strongest at certain Burn level is quite nice. Having just 1 higher than enemy means that as long as you don't run into disruption they can almost never catch you. Though AI can use a smaller tackler fleet, so going below 10 (full frigate fleet without degraded engines) is an especially important breakpoint.
I very much do not like compositions like 1 cruiser and few frigates for example - that's not good enough to fight a fleet of cruisers, yet makes me exposed to such risk. Same for having a Capital - if I have one, it's gotta be capable of beating multiple enemy ones - so Onslaught/Paragon or similar from mods.
I do grudgingly make exception for a single DE + frigates composition though. Medusa is just good enough to be worth it, in vanilla. Plus there are no really efficient cargo frigates.
Though I guess a lot of that is more relevant for Nexelerin. In vanilla you start hostile only to Luddites (very small fleets) and Pirates (weakest faction and any large fleet will be slow due to d-mods). Bounties are not going to run anywhere either.