Hardened shields getting downsized in combination with the unique experience of this brilliant mod makes me think were on a slippery slope here, and it should have been apparent from the start really: when you think in a granularity of 1/hullmod instead of hullmod effectiveness/OP, youre naturally inclined to just slap on the most expensive mod; weve seen it with SO, now HSh is getting the bat, and heres whats going to happen next: heavy armor will be the most expensive one and everyone will build in that, so then it will get reduced, then it will be expanded missile racks, then it will be ITU, then it will be RB, etc etc ad finitum you get the idea. eventually this would leave us with all hullmods costing the same amount of OP and an aspect of the ship customization granularity being cut out since you dont have to consider the balance of mod OP vs weapons/caps/vents OP anymore when all mods will inevitably cost the same.
No. I don't agree with this premise. Only the most expensive 2 or 3 hullmods are s-mod'ed, not all of them. So this just means that there's an effective ceiling in the cost of hullmods. When a new system is introduced there will naturally be some oversights and balance changes. So some of the extremes naturally get tuned. SO not allowed to be built-in is an example; it's supposed to be very expensive for a reason, which gets bypassed if it were built-in. That doesn't mean that everything gets adjusted to be the same. Rather, only the most extreme ones need to get adjusted to fall in line with the upper end of the scale, while the rest can stay put.
Making this a bit more concrete, Alex likely had some rough numbers in mind of how much s-mods would be worth in terms of OP. Let's say around 30-40 OP for cruisers, or 45-60 OP if you get the Special Modifications skill for a 3rd one. This just means that the most expensive hullmods that could be built in should be in the 15-20 OP range, and it's the hullmods in that range or above that needs to be looked at, not all of them. There are only a small number of such hullmods, but -- importantly -- there are more such hullmods than what the player is allowed to build in. So, just like Tier 5 skills, the player needs to pick and choose.
Keep in mind built-in hullmods are permanent. So the player can't change them unless and until the player has resources for another ship (either buying it off the market, recovering from battle and then restoring it, making it from their colonies, etc.). So the player has to choose between how generally good it is, versus if it's more specialized but not necessarily always useful, when deciding what to s-mod.
For example, take Expanded Missile Racks. It costs 20 OP for cruisers. Do you want to build it in for an Aurora? Well, it really depends on what your build is for the Aurora. If you want to make use of its missiles, maybe. But the Aurora has many other good loadouts that don't involve missiles. So if you s-mod it in, you're basically committing that Aurora to a missile-using build. Since that's a relatively specialized build, the hullmod can be more powerful and cost more OP, "knowing" that it'll likely be built-in. Whereas if you want a more generally-useful hullmod, you might pick Integrated Targeting Unit instead, knowing that it's always useful (except for SO builds) regardless of your build. Since the s-mod is permanent, the player is forced to decide between a "better" but more specialized hullmod, giving up flexibility in ship loadouts, versus a more general hullmod. That's part of what makes it interesting.
Similarly, pretty much all the more expensive hullmods tend to be rather situational. For example, for cruisers, the hullmods listed by OP are:
Safety Overrides (45 OP, can't be built in)
Operations Center (30 OP) -- if the player needs more command points (relies on the tactical and issues commands often)
Augmented Drive Field (24 OP) -- if the player wants the ship or fleet to travel faster in the campaign
ECM Package (20 OP) -- if the player wants to decrease the enemy ships' weapon range (and increase their own ships' weapon ranges, by comparison)
Expanded Missile Racks (20 OP) -- if the ship uses enough missiles to warrant it
Heavy Armor (20 OP) -- if the ship takes a significant amount of armor/hull damage, and/or relies on armor/hull tanking
Nav Relay (20 OP) -- if the player wants the ships to go faster in combat
Hardened Shields (18 OP) -- if the ship is on the front lines often
None of the above hullmods are "must haves" for a given ship, it really depends on if the build needs it or not. So the player may be better off choosing some of the hullmods which are 15 OP instead (of which there are a dozen). It really depends on the build. So no, the player doesn't just choose the most expensive hullmods to s-mod, the player choose the most expensive hullmods
for the desired build.
The 40 hullmods that are 15 OP or lower are essentially unaffected by s-mods, unless the player for some reason doesn't choose at least 2-3 hullmods that are 15 or more OP, to resort to building in hullmods that are worth 12 OP or less. That's over 80% of the hullmods that aren't affected.
All this is "priced in" in terms of game balance. So all ships, which in version 0.9.1a could get +10% OP (via Loadout Design level 3), can now get +35-40 OP (for cruisers) instead. So overall it was somewhat of a buff to ships.
-----
Hardened shields being nerfed may or may not be related to s-mods. It's just a really, really strong effect in general. Shields taking -25% damage effectively means +33% "shield hit points" (i.e. flux), but, importantly,
this multiplies with other modifiers. For example a mythical ship with 10,000 flux and 1.0 shield efficiency can absorb 10,000 points of damage to its flux. If the ship has 100% CR (10%) and has an officer with Shield Modulation (20), the shield efficiency decreases (improves) to 1.0 * 0.9 * 0.8 = 0.72, so now the ship can absorb 10,000 / 0.72 = 13,889 damage. If it now has Hardened Shields, the shield efficiency drops to 1.0 * 0.9 * 0.8 * 0.75 = 0.54, so now the ship can absorb 10,000 / 0.54 = 18,519 damage, an increase of 4630 damage that it can absorb. Hardened Shields, despite being advertised as "-25% damage to shields", actually gives the ship an additional 46% of its base amount of damage it can absorb in this case. That's huge, so it shouldn't be surprising that it gets a nerf.
-----
Keep in mind that Story Points are basically just experience points, and thus spending SP for s-mods is basically just an extended leveling system, where as you do more stuff with your fleet (mainly, killing other ships), your fleet gets better over time. You essentially get more OP to spend on your ships. So another way to extend the s-mod system would be, after an s-mod is built-in, you can spend another SP on the hullmod to unlock an elite effect, similar to elite effects for skills. That would create another avenue for leveling up and further customizing each ship.