It wasn't just that he was winning, he had two very big problems:
a) His dash-everywhere playstyle was really annoying and unfun to play against. The forward dash was difficult to react to because of the invisible startup frames and the slippery style really didn't make sense with a sonic-boom chucking defensive character kit.
b) Nash and Chun were gatekeeping a large portion of the bottom-tier cast in S1. If you got destroyed by one of those two, it wasn't really worth playing the character even if you had good matchups against a lot of the other high tier characters. I don't believe it's an accident that these two were unceremoniously dumpstered, and they'll likely be toned up bit by bit over time to avoid a risk of S1 happening all over again.
In a world where we have Rashid, Cammy (talk about hard to react to), Ibuki (oh my god), Dhalsim, Vega and Bison in V-Trigger, dashing and teleporting everywhere, but Nash's forward and back dash was more ridiculous?
The forward dash is still difficult to react to, as it should be and they are increasing it's speed from 19 frames to 18 in the next patch, originally 17. What are they even doing at this point? He still walks like he's waist deep in shit. Weak defense, no wakeup game, no EX reversal, weak V-Reversal (doesn't knock down or cause white damage and is easily thrown out of), can you imagine if he didn't have a decent dash for some kind of mobility? You may as well put a blonde wig and a vest on a street lamp and give it a life bar.
I'm not sure I follow your second point but not because you didn't explain it well enough. I think it's just above my understanding of how the tier system works.