That was not a balance change.
It was a change to make custom enemies and custom projectiles possible, as the game previously was literally checking if something is currently displaying a "hit" sprite or not to determine whether to deal damage. Since this basically made the entirety of enemy logic a bloody pile of hacks (e.g. for firing animation enemies are actually changing their idle/walk sprites), and imposing this upon modders would be suboptimal at best, I have taken the time to make it into an proper countdown timer until next melee hit instead.
However, as you have mentioned, this does seem to change damage of some things... I'm currently figuring out why's that, as it would seem like it should have been a +-10% damage difference (off-by-one-frame) at most. Unfortunately, making this mod isn't my full-time job, so I have to balance between mod development and actual work.
As per palace dogs and Big Bandit in particular, the ability to hit them multiple times during attacks will be returned in next update explicitly, since the game does seem to have been balanced around the bug (instead of fixing it).