It's unbalanced in PvE as welk. I shouldnt have to bother with this crap to keep up with NPCs. The combat just became a slog.
If you upgrade your loadout the NPCs just hit back harder. I recently switched weapons from multi-s to frags on my CZ FDL to get better DPS, now I can kill condas more quickly but my shields (unchanged) go down faster because I take more incoming fire. It is better in the sense that I can kill more quickly and therefore compete with other players, but the difficulty has increased in line with my 'improved' ship.
In 2.1 the NPCs were an utter mess. Several years later they are rather better polished and scale to your loadout in most cases.
If you want to compete against other players then yes, you probably need the best gear and familiarity with it.