I notice a big difference between DOA4 and DOA5 in terms of health, and, I prefer the DOA5 health system to play in general. Even though you can argue that a lower health bar helps out lower tier characters by them needing two hits instead of three, you can also see it the other way around, as in, bringing the higher tier characters that need two hits up to three hits like the lower tier ones. That also helps the lower tier characters... Hypothetically.
In any case. The less first hits you need to win, the more prone to luck the matches are and the less the reading of your opponent plays a role. The more first hits you need to win and the longer the matches take, the more the difference in skill and adaptation will be apparent, since a lucky blow will have less consequences. It's the same reason I prefer three rounds over two rounds. If you have three rounds combined with two first hits per round to win, you have to get six of them, versus nine of them if you need three hits. Whoever reaches 9 hits first is a better measure of skill difference than whoever reaches 6 hits first. You can compare it to say racing or whatever. 24 laps is a better measure of skill of the drivers than 12 laps on the same track. Or, 9 innings is a better measure of team quality in baseball than 6 innings. Whatever example you want to use. There's a reason you need to win more matches in later stages of a tournament.
The main good point I agree with is the environmental damage playing a bigger role, but that can also be fixed by increasing its damage rather than lowering health. Just my thoughts. There's no harm in testing though... So go for it.
And now I'll go get my flameshield.