Why isn't this allowed to compete with the Mindy 4?
The funny thing is you've just run into something that other factions and equipment developers inside and outside of Yamatai have been running into for years. This is a question that people have had for a long time, "Why can't I make something better than what Yamatai has?" or "Why can't I make something better than the Mindy?" are questions that have been asked when someone in Yamatai tries to make a new power armor, or when someone outside of Yamatai tries to make something that approaches Yamatai's equipment capability.
As for other factions innovating, the key point there is that they're still
not allowed to exceed Yamatai's capability in most or all respects of technology. Yes, the NDC is rapidly innovating but if you look at the Revenant III, it's a giant stompy armor reminiscent of the Terminator armor from 40k, just a little bit more mobile. It's hardly as if the NDC is leapfrogging the SAoY in anything.
This exists, from the perspective of someone who I'm sure people think dislikes Yamatai a lot, mainly so that site staples and icons don't become obsolete. The Mindy's what's on the Hinomaru, after all, and I think that if we must restrict other factions' tech in order to make sure the Star Army isn't overtaken in relevance then it's logical that we try to protect the Mindy's relevance in the same way.
Additionally, I think that Yamatai's not innovating much in terms of increased performance of hardware simply because it's reached the upper limit of what we're comfortable with for the stories we want to tell on SARP. There's simply no further upwards to go.
But at the end of the day, I think that a lot of the talk in here isn't people having problems with this being simply just more capable than the Mindy, it's people having a problem with it being more capable than the Mindy, cheaper at the same time, and having no real downsides that players will be forced to contend with since no player's going to really have to deal with joint pain or trouble piloting this and those are the main downsides of the Molly.