Arawn,
I can't agree with most of what you said.
Point by point...
Overall
Your experience with 5th ed. was completely different from mine. Most of the things changed are now closer to what I always thought they should be (based upon their descriptions in earlier edition). I was very happy with most of them.
Magic Resistance
I like the new magic resistance. Now it actually means something. Before, it always felt underpowered compared to its description.
As for the sahir, they were seldom described as front line fighters. It was alway the summoned jinn that did the direct fighting and they have plenty of magic resistance.
The Dominion
All forms of magic being more difficult in the Dominion has always been part of the description of the Dominion. The Dominion making magic difficult does not make it the "enemy" any more than a fence is the enemy of a person that would like to be on the other side of it. Cosmologically it makes perfect sense to me. The Dominion has always been the primary thing defending the common people from the "unnatural" things of the world.
Faeries
Faeries are not (even in 5th ed.) "...just human "make believe..."." The complex interactions between human belief and a Faerie's existence and role have been explored before. See "Faeries" and "Faerie Stories" for examples. You will find that the version of Faeries presented in 5th ed. are not all that different. The differences in nature between the Magic Realm and the Faerie Realm are more clearly defined in this edition. Clear definition is a radical change from earlier editions, but I think that having such a definition is an improvement.
Personality Flaws
"A character can not have more than one Major Personality Flaw. A character should normally not have more than two Personality Flaws in total, as more risks him becoming a caricature."
Remember that a Major Personality Flaw "...should be what people think of immediately when they think of the character" and "A Major Personality Flaw constantly drives your character to act and get involved in stories."
(All quotes are from Ars Magica 5th ed., page 37.)
The only rules restriction pertaining to Personality Flaws is that you may not have more than one Major Personality Flaw. You can have as many Minor Personality Flaws as you want, you just have to be careful to not make your character into a caricature.
It was my experience with earlier editions, that a plethora of personality flaws just made most characters into stereotypes rather than making them more interesting... In our saga, we allow extra Personality Flaws only when the player can show that they form a coherent whole and will be interesting rather than annoying in play. So far, nobody has had any trouble with this...
Major Hermetic Virtue Restriction
I do agree with you that the limit of only one Major Hermetic Virtue may be extreme. I don't see it unbalancing the game and some combinations of Virtues make sense to me. For example, Gentle Gift and nearly any other virtue... Restricting this makes no sense to me...
Improved Characteristics
Three levels of Improved Characteristics (the equivalent of a single Major Virtue) will allow a character to have two traits at +3, four at +1 and two at 0. That seems pretty impressive to me...
William St. Loe
Improved Characteristics (x3), Large, Wealthy, Landed Nobel...
That should do it...
(Personally, I was always more impressed by William Marshall. He arguably could qualify as a Mythic Companion and he's in the right time period...)
Sit vis vobiscum,
ShopKeepJon