They should have kept last year rules. Everything was working fine and maybe with Honda RB would have joined the fight for the title from the first race.
Instead we got the most boring season of all time.
Indeed.
The FIA is also facing a different issue IMO
Normally if you want to stop a domination you ban very specific things a team excels in or you put more emphasis on something they dont excel in, and most of the time it is one or two very specific things. And they even tried this for Merc when they banned the trick suspension for instance. The thing with Mercedes though is that the entire package is good, so whatever you do they will probably always be there and thereabouts, and something like 2017-18 is probably close to the most you can get out of this car-wise, but then they have a great operation and driver, so they still win.
As other have said when more and more key figures are leaving they will probably be beaten. Or if the budget cap is so drastic that the top teams cant adjust to this, but it wont be because the budget cap will probably be only bit-by-bit introduced.
Most likely the most efficient way to deliberately stop them is to do something on the tyres. It's the only part of the car you cant directly influence in a short space of time. Its also what Red Bull held back in 2012 and for half of 2013 if we look back, but there comes the downside into play that Pirelli seemingly cant produce these sort of tyres without blowing them up...
In all: Mercedes has the best team of this decade, the best driver of this decade (Hamilton), and only if he stops and drivers like Bottas or Ocon keep beating Verstappen & LeClerc, yeah, then it is time to change the rules to stop Mercedes.
I do agree with the rest of your post: This bit however, I agree that that scenario you are describing is probably going to be the one that takes the credibility away for good, but yet this doesnt mean that the slightly better scenario (the best driver wins in the best car year after year) is a good one either. Whether rule changes are that efficient is a different topic all together - as mentioned - though.