I wouldn't say its horribly unbalanced. It's probably as imbalanced as your typical fighting game from that era.
FHD is definitely a "more than meets the eye" fighter on the Neo though. I think a lot of people make assumptions based on it's graphic style, year of release, and Data East's fighting game track record (or lack there of), and don't realize how slick of a game it really is.
It is a very slick game engine wise and the weakpoint mechanics are pretty interesting. Everyone has a different weakpoint and if you get hit three times you are dizzy'd. You also take more damage.
The weakpoint system is cool as you can change high low blocking when being hit by combos to prevent certain attacks from hitting your weakpoint doing less damage or drop them due to the hitbox. It can sometimes save you from being killed in a full combo. I never liked dizzy though and felt it is definitely one of the games weaknesses since you can't mash out of it. It makes the top tiers even better as almost all 4 have guaranteed kills after a dizzy except in certain matchups.
Game even has air combos like Mizoguchi and his kick loops which are all very fun to do and require good execution vs the top tiers who have ez mode high damage combos for the most part. Can even do low profile tiger knee (2369) fireballs with Yungmie. Or how about Mars the grappler who can command grab in the middle of combos? Lots of interesting stuff you just didn't see at the time of its release in 1994.
But yeah the cool weakpoint system or Mizoguchi loops or hiding your weakpoints is kinda overshadowed and moot when Ray does baked potato wheel kick (full invincible and can do in the air), balloon memes with karnov/slide teleport glitch/infinite, Zazie bitch slap for instant dizzy sometimes instant death and ducking hell fire (6,41236 to do a cool glitch where you do ducking hell fire anti air with his dodge tldr invincibility), or Lees ZesshouHou/ez mode draogn punch that is a hadouken. The bottom tiers winning in this game is like Blanka winning tournaments in super turbo.
Very fun but broken game. It really needed a balance patch. Unfortunately data east seemed to go out of business shortly after.