I would have voted for restricting the number of same class from squad, but then I saw a player with 3 berserkers on his team and look hella awesome! Limiting to 2 of the same class per team encourages creative play and I kinda support that. Maybe put the restrictions only for arena like taunt and the healing? (maybe a bad idea so just take it as grain of salt)
Diminishing returns is what I voted for and kinda makes sense. It's like fighting games where the longer the combo, the less damage they can deal (street fighter V). Limiting amount of triggers would be like allowing only 2 wall slams (second one will render them invulnerable and fall to the ground) in Dead Or Alive 5.
Now that I think of it. #4 is still the best option. Restrictions is one of the ways to promote creativity, and can make it more fun.