You make some good points. OD is both a very powerful skill, and relatively cheap. It's also more simple and straightforward to develop a strong look inside offense than an outside oriented one. However, I don't feel that the only way to success is by playing look inside with high IS bigs and good defensive point guards. With the right players I think any tactic could be dominant ... it's just that most teams don't have the right players.
For instance, to run princeton, you would want all of your players to have great jump range, inside shot, and passing. A team where everyone can score inside and knock down threes would be tough to defend against. But it's virtually impossible to find a guard with high JR and high IS, let alone one with high passing too. I think this holds true for most tactics, with the right players any can be effective, but it's more difficult and expensive to build an offense for princeton than an offense for look inside.
I also don't think OD is overpowered so much as there isn't enough willingness to create players that can overcome it. A 20 JS/JR/DR guard with 13 OD would be virtually unstoppable against most teams. If that player also had decent ID, he would have no problem guarding a SG in a look inside offense. Then surround that player with some balanced guards that can pass and defend, and bigs that can rebound, and you have yourself an outside offense that compete with a lot of teams.
All that said, I actually will be making a roster change or two later in the season, and may play LI against some teams.