Well in your case you also could ask: Why has GPG made my char looking ugly now?
Because the item requirements of Lorethal set should make evident that it must become obsolete anywhere during act3 of mercenary mode. Thus wearing it much longer without suffering notable damage was the consequences that some item bonuses and skill benefits were too generous in v2.0-2.2 and that you probably were over-leveled too (compared to the monsters fighting against).
I'm sorry that you are forced now to look for another equipment, but even with or without BW its a fact that you can't use sets forever. Sooner or later they will expire and everybody must find something new - for some people this is annoying, some (most?) others are inspired to play on.
Generally i like all blanacing efforts provided by a patch resp. newer version, however i agree that GPG has gone here a quite unpopular way. Instead of reducing some/many values they also could increase everything else (inclusive monster's damage) - well same result at the end but such an inflation method would pat player's improving-intentions for his char stats much more.
Actually i would hope GPG had the courage to go much further, eg. some powers had to be reblanced too and exp curve/calculation aswell - while you level rather slow close towards level 100 you get levels too easily at the beginning (please make a post if you defeat once Valdis at/below level 40 without running away from monsters
).
And even if the situation has become some better with BW (i like the Surgeons
) - veteran and elite mode are generally still no real challenge for a conversant player...