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[Histidine]

As Jaghaimo said, hullmods in normal use are already balanced by OP (though I'd say not necessarily well). That being the case, the simplest way to make cheap hullmods more attractive for S-modding is to work off their OP costs.

My personal idea for this was: S-mods have a benchmark cost (say 5/10/15/20 per hull size); S-modding a hullmod cheaper than this gives a partial or complete OP rebate for the difference, while a more expensive hullmod retains part or all of its cost over the benchmark.

One concern I had is that people who don't particularly care for any hullmods but want OP for non-hullmod uses would just bake in the cheapest relevant hullmod and collect the OP coupon. i.e. kind of the same issue as current, but in reverse

tl;dr: Do we know if SP=S-mod gives more or less build variety than SP=simply more OP?
If yes: Is SP investment meant to be an easy thoughtless choice, or a hard ponder worthy one?
If the choice should be hard, then the current system or even a more complex one would be superior, if the choice should be easy, then making it a generic OP investment would provide the best results.

I dislike SP just adding more OP to a ship, because 'free OP coupon' is boring and lacks the characterization of the ship involved, compared to specializing with a built-in S-mod.

On Discord the user named Zym had a similar idea, but the free OP would only be usable for hullmods (i.e. a new 'OP but for hullmods' pool). This partially avoids the issues, and you could even make it a generic property of some unmodified hulls (say Hyperion has 10 hullmod points in addition to its regular OP); let them be kitted out with more hullmods without buffing their flux or weapons capabilities.

[Ad Astra]

Yeah, without special attributes to separate S-mods from normal mods it all reduces itself to OP and how much risk does the investment carry.

Aside from the S-mod becoming a buffed version of the normal mod, another alternative would be to have s-mods exist only as exclusive mods that can't be installed without being permanent, they would have to be powerful and restrict the build of the ship into a certain class (or maybe a couple), so they'd only need to be compared and balanced between each other and not the rest of the mods and OP. But that would be a very different mechanic and objective than what's in place right now.

The only mod to exist so far that would be in that level is Safety Overrides, turning any ship into a specialized hunter type.

[SCC]

.
My personal idea for this was: S-mods have a benchmark cost (say 5/10/15/20 per hull size); S-modding a hullmod cheaper than this gives a partial or complete OP rebate for the difference, while a more expensive hullmod retains part or all of its cost over the benchmark.

Sounds like the worse of both sides. You don't get the full customisation of extra OP and you are also stuck with an s-mod.

[Flet]

I dont think there is necessarily a problem with a small number of the most expensive hull mods always being the ones that get s-modded in and of itself. The main worry is that this system will affect overall balance decisions, as the OP pointed out.
If the game balance is totally blind to the existence of s-mods, such that ships and mods are balanced as they always had been based around op cost, then thats one thing. But if you start to see balance decisions, nerfs to some ships because its assumed they will always have these free high op hull mods in player hands, nerfs to some mods because they will just always be s-modded and so the assumption is they are 'free', etc, then the whole system needs a rework because the entire spirit of the story point system was kind of like its a special player power above and beyond what is normal within the universe, and the builds and balancing and everything should work with out a single s-mod being employed.

Currently s-mods being the only way to invest in a ship with story points to make it special might contribute to the sense of a dilemma where there isn't any. If there were other ways they could be spent to improve a ship and free hull mods was just one of them, and there was say some kind of maximum investment you can put into a single ship, then the return of a sense of options comes with out the need to try and make the s-mod system do everything for you in terms of special customization.
The romanticized idea is to see them as 'install a special hull mod to make the ship unique'. This places in the mind that the specific hull mod is somehow special to that ship, as if some justification or backstory might need to exist to explain what makes this ship so unique. If however it was as straight up as 'the most expensive hull mod is free', which is what it essentially is, it sounds less like you did something personal to the ship and so is less satisfying. By adding alternate uses of story points on ships, it can return the unique sense with out disrupting the current workings of the mechanic itself.