I agree with most of what you've stated here, and how you've stated, except for Dipping. I'd stick Dipping into the problematic category, because of the impact it has on damage at early levels, and the fact that it can be done, with a candle. If it were a scenario, where you had alchemists fire, and "dipped" a blade in it to cause it to light, using up the alchemist's fire and an action to dip, then it would add a cost that would balance out the benefit.
As it is now, if you are within range of anything alight, it's a no brainer to dip.
True, but you can just not dip, which is why I consider it a non-core mechanic. All you gain are some damage points. That said, it's a lot of extra damage points at low level, but it doesn't force you to formulate your tactics around its existence like everything in the bottom category does.
Defenders of the current system like to argue that you can just simply ignore the cheese. That argument immediately falls apart when you simply rub two brain cells together and realize there is no way to play where you can ignore using height advantage and disadvantage, because you'll be affected by one or the other in most given situations no matter what. There's a huge difference between ignoring an option, and having to go out of your way to avoid a mechanic entirely.
I can't be sure but honneslty the difficulty of a few encounters let me think that the game is also balanced for you to use it a lot. Can't say for higher levels but +2D4 (weapons) + 1D4/turn (burning) is a lot of damages. These additionnals damages are the difference between one/two/three (depending the opponents) more or less turn. If you're playing the game with this mechanic even the hardest encounters are way easier and our weapons are way more effective than those of our ennemies.
You can also avoid shoving. The buttons are right next one of each other.
I never used it on normal playtrough because highground/backstab/jump+disengage are more than enough to beat the game easily but in a solo playthrough you really realize how powerfull it is. Without dipping I think it would way harder. A lot of solo playthrough are also made in dual wield and dipping is probably a reason.
Psychologically it's very hard to not take advantage of it as well. A friend and I played the first play-through together and we definitely had complexity. The second time through it was way easier because, without even discussing, we were Hulk jumping everywhere and abusing every Larianism remarking, without analysis, "Wow this is so much easier!"