Don't get me wrong, I can see why it's annoying, but I also think this might be a case of the small minority being overly vocal about it.
Are only a small minority of players here, complaining about this nerf? Of course. Only a tiny minority of people who own Pillars are even active on these forums. Most people who have played Pillars have probably never fully unlocked the Unlabored Blade, many have probably never even picked it up. None of this makes the nerf a good idea or a good use of Obsidian's time*.
Yes, the Unlabored Blade was very powerful when used by a Barbarian. What I don't understand is why, in a noncompetitive single player game this matters. If people want to play an overpowered build then so what? Why did Obsidian feel the need to step in a stop someone having fun in their particular way, on their own, in their own time? Moreover why did they feel the need to do so in a way that made the Unlabored Blade underpowered for every other class. "Sorry dagger wielding Rogue, because someone somewhere is making the game too easy using the Unlabored Blade with a Barbarian we are making this otherwise cool item less good than a boringly named dagger available at the end of Act I with some enchantments."
Now I've found a way to revert the UB to its original form, so it's not a big deal for me gameplay wise (and I am not going to use it on a Barbarian anyway since I think Barbarians look silly wielding daggers), but it's the attitude of Obsidian that bothers me. This sort of behaviour is what I'd expect in a MOBA, where balance is important, but it's precisely to get away from this sort of thing that I come to single player games. Baldur's Gate 2 was objectively terribly balanced and yet somehow it managed to be fun. In fact a lot of the fun for many players was because of this, both in learning the system so well as to be able to build ridiculously powerful characters, and challenging themselves trying to beat it with bad ones. It's a shame to see BG2's spiritual successor move away from that.
*I realise it probably took about five minutes to do. I think those five minutes would have been better spent letting the programmer who did it go home earlier it's such a pointless change.