lom2 said "why is this needed?" its needed because some people, like me, want to use pure melee swords, or spears, and not shoot projectiles. but if we do that, we get slaughtered.
"'Some people like using swords and spears [without projectiles]' Nothing's stopping you." actually, yes, if you do that, you'll get smashed into the ground. try using beetle/turtle armor and a keybrand against a mourning wood. youll get flattened into a grease spot. no, really, try it. and no vamp knives.
"By the way, if you have a armor that needs such a high defense to prevent it from getting butchered, but has so high a defense that ranged and magic mains are liable to choose it over their respective armor sets (which provide a pretty darn fair boost to their respective attacks), to a point where you are forced to cripple their attacks, then this armor has a serious design flaw." there isn't really an alternative for people who want to use the "hit enemies with a non-projectile sword" style in endgame. and by the way, that style was the only melee style before 1.1. apparently, redigit didn't mind it there.
"No one likes to shoot a rocket III out of a rocket launcher and watch it do 16 damage to a Possessed Armor." that is exactly why this is a melee set, not a ranged or mage set. because it has lots of defense, all other melee armor has higher defense than ranged. beetle armor has the same problem.
"We don't really care about the "balance" of the ranged/magic nerf, we care about the fact that you're now limiting our playstyle." there is exactly no reason why you would be forced to wear this armor, you can just use beetle armor if this one bothers you. it has good defense, but doesn't give less damage. also, spectre armor nerfs damage to compensate for it's special ability, this armor does exactly the same thing.