Sorry for the all caps and censored cuss word. I'll gladly edit them out. My intention was to highlight an important point and I thought that stating my good intentions ahead of time would give me some leniency with tone. I suppose I took a risk by doing that and I can just as easily bold important sections to highlight the proper points. Again, sorry. I also meant sucking up as a half joke. I'll be more plain so there's no room for interpretation this time.
1. Damage resistance is armor rating is physical damage resistance.
When you type "getav damageresist" in console the resulting number does not show the hidden armor rating every character gets from each armor piece equipped (+25 hidden AR for each piece).I tested this in game and created a google docs spreadsheet so you can better see the resulting numbers and impact of armor rating in game and reference for this topic. https://docs.google.com/spreadsheets/d/1KW8RTPl4zhMATYmshjU0oaewYPGlDEEhF0pi2IHrkJ4/edit?usp=sharing. Again, I double checked and tested these values in game, feel free to do the same.
From here on out when I say "AR" I am referring to the sum of visible AR and hidden AR. I will refer to the resulting damage coefficient of AR as the "modifier" (the number your damage is multiplied by to become it's actual damage). For example, 125 AR results in a .85 modifier (125*.12=15 1-.15=.85). Likewise, The cap of 80% physical damage resistance results in a .2 modifier when attacking that enemy. When you play on adept your 8 damage steel sword does 8 damage, when you play on legendary the display damage is still 8 but is multiplied by .25, I will refer to this modified displayed damage as "difficulty damage".
2. Difficulty setting does not affect the in game impact of AR.
As you can see from the spreadsheet, if the enemy's AR decreases your damage by half in adept, it will decrease your damage by half in legendary.
3. Roughly 90%-95% of the enemies you encounter in skyrim have 0 armor. This means, using all 3 words, USSEP Marked for Death grants a 1.09x modifier while Vanilla goes from 1.09x-6.4x (over the course of a long 60 second engagement time)
The highest you will see before lvl 28 (Ignoring rare random encounter NPCS titled "argonion", "imperial", etc.) is around 130 displayed AR+125 hidden AR from maxed gear bandits (If you make it to level 28 than the max AR you will ever see is 180 displayed + 125 hidden). If you take a look at the google docs sheet you can confirm that going from 0 AR to -25 AR/-50 AR/-75 AR results in 1.03x/1.06x/1.09x damage modifiers. This means that the USSEP marked for death does very little no matter what difficulty you are playing on. It is quite possible that you can one hit citizens while using this shout in USSEP but I would argue that if you could one hit them after using this shout, you could just as easily one hit them before as well. Not to mention you have to shout/aggro them before hitting them as opposed to making use of the sneak perk tree's much higher damage modifiers that can be done while being hidden.
4. You have to reveal your position in order to use the shout, meaning you opt out of sneak perks with substantially higher and instant physical damage modifiers
5. 4500 seems like a crazy huge number in the context of most skyrim stats. However, When you do the math you find out this translates to 6.4x damage the vast majority of the time which isn't ludicrous at all.
6. Yes, followers and familiars are incompatible with this shout. That is a decision you will have to make when you decide to use this shout. Making this decision is better than not having the choice in the first place.
I think you either misunderstood how AR works or misunderstood how Marked for Death works. USSEP Marked for death does not take an enemy from 80% damage negation to 61.25% damage negation. While it is true that the higher an enemy's AR the more useful AR reduction becomes, -75 AR still does barely anything to a hypothetical enemy with 80% damage negation. (Realistically the max you will see is ~30% physical damage negation from bandit chiefs)
Under USSEP, The shout doesn't do -75% AR(aka DR) in legendary or novice as stated in the quote, it does -75 AR on all difficulties. Regardless, taking the example given, If an enemy had 80% physical damage negation (the cap) they would require a sum total of 667 AR and the -75 AR from USSEP marked for death would bring that down to 592 (71% physical damage negation). This means you would go from doing .2 times your difficulty damage to .3 times your difficulty damage. In this extreme hypothetical scenario, the USSEP marked for death shout is at it's maximum effectiveness because it acts as a 1.5x damage modifier (Which is still subpar given skyrim's plethora of extremely better damage modifiers from the sneak perk tree that you are choosing to not use if you use this shout.) Unfortunately absolutely no enemies have anywhere near this AR in game and the majority have 0. You will find that the highest AR from non random-encounter enemies in game comes from bandit chiefs who max out roughly around 130+(125 hidden) AR. This would result in 30.6% physical damage negation, or in other words, a .694x modifier. In this realistic and uncommon best case scenario for USSEP Marked for Death the -75 AR takes it from 255 AR to 180 AR. In other words you go from doing .694 to .784 times your difficulty damage, which means the shout itself acts as a 1.13x modifier. So the best you can realistically hope for in rare scenarios from USSEP is 1.13x modifier max. If you choose to use the USSEP version of this shout for it's armor reduction in place of using a follower, sneak, or elemental fury you are making a mistake.
8. The 60 damage over 60 seconds DOT ability of this shout is worse than the 2 worst vanilla damage shouts in the game.
The DOT is a secondary feature that has no bearing on whether or not you should decide to use it. To illustrate this let's examine 60 damage over the course of 60 seconds. The two worst shouts in the game that you are choosing not to use in place of casting this shout, fire breath and frost breath, both provide more damage per second of cooldown (aka dps) and provide their damage instantly as opposed taking an entire minute to deal damage. (frost breath is a 5 seconds DOT, but for the purposes of comparison to 60 seconds a 5 seconds DOT is being considered instant damage). Not that you should never use fire or frost breath over elemental fury or soul tear which are both better for dps than either previous shouts. If by some far fetched means this 60 second DOT is enough to kill the enemy you are fighting, then the target could've been killed by just hitting with your sword 5 times (or a different shout) and would've taken far less time.
edit: I'm completely wrong here because I thought Marked for death did 1/1/1 DOT when it does 1/2/3 DOT. The 3 word version of this shout approaches the highest magical damage dps of all the shouts in the game. (Soul Tear being next best with 3.33 dps when used off cool down) Marked for Death's 1/2/3 DOT for 60 seconds with a 20/30/40 cooldown means the following: Using this shout will start at 1/2/3 dps and approach 3/4/4.5 dps when used off cooldown. Keep in mind however, that your dps will start at 1/2/3 and won't even begin to approach 3/4/4.5 until 20/30/40 seconds. For example, stacking the 3 word version of marked for death every time it's off cool down technically approaches 4.5 dps but takes an entire 67 seconds to surpass Soul Tear's 3.33 dps and takes a full 80 seconds to deal the same 300 damage soul tear provides instantly upon casting.
9. Stacking is possibly a bug.
Not much to say here. Completely subjective if you think this is a bug or not. Funnily enough, USSEP doesn't actual get rid of this mechanic even though it say it does in patch notes info for this shout. It's just no longer permanent and doesn't build up in AR.
10. Armor reduction effects maintaining after death and respawn is obviously a bug.
11. Permanent Armor reduction is possibly a bug.
The game designer who worked on Marked for death went out of their way to check the "no recover" flag. No recover = permanent, so all the evidence we currently have points to this being an intended feature and not a bug.
12. Marked for death affecting followers is possibly an oversight.
Assuming the game designer wanted the effects to be permanent when he checked the no recover flag, I find it likely they weren't thinking about how this would affect your followers if you accidentally hit them. From a developer's perspective followers are seen as replaceable. The game encourages this by leveling followers to the player's level permanently when they are discovered, meaning any new follower can only be the same level or higher as your previous one.
On a separate note, Regardless of how imbalanced you think vanilla Marked for Death is, followers allow you to clear high level enemies with 0 risk of death when done properly. Followers get tankier on higher level difficulties (all npcs take .25x damage on legendary meaning your follower takes .25x damage from enemies). Getting to choose to use marked for death and avoid the use of followers is moderately strong but is far weaker than breaking the game in half with an immortal follower that gets tankier with higher level difficulties.
13. The Armor reduction build up over time was never a bug and belongs in the game.
14. If fixing the aforementioned bugs for some reason results in the main mechanic of the shout being removed (armor reduction over time) than the "fix" essentially removes the shout from the game instead of just giving players the option to avoid using it.
15. If you claim this -4500 AR (6.4x modifier) is overpowered you would have to also say that all the damage modifier sneak perks are overpowered
16. Marked for Death's -4500 AR over 60 seconds mechanic isn't a glitch just because it seems op to people who don't play legendary/use followers/don't use sneak. There are plenty of mechanics that are far more op and just as legitimate.
(Yes, you can one shot a citizen on adept with this shout if you aggro them and wait an entire minute while the guards rip you apart. Consider that you can also one shot a citizen with pretty much any of the sneak attack perks while not aggroing the entire city.)
I believe the shout is broken in USSEP due to misinformation. Too many people see -1500/-3000/-4500 AR and think it's op because they think they know the math behind AR and how this shout fits in the context of damage amplification from other skills. If you have taken the information presented and still believe the shout isn't broken under USSEP with it's frankly useless -75 AR on a maxed shout so be it.