I guess my main concern is better worded as: vague flavor restrictions shouldn't be allowed to balance PrC mechanical power.
Wait there, I do not think that narrative requirements are there for
balance. Actually I will say it better:
no requirement (narrative or otherwise) should ever be used as a balancing element.
If requirements are designed as cost to balance the benefits, then it means the benefits make the prestige class better than a core class. This IMHO means failure of the whole prestige class concept. And it means the
death of balance in the game (like in 3e, once enough PrCls were published), because there is always a way for the powergamer to get those requirements cheaply, which non-powergamers will end up blocked from taking prestige classes just for fun. Lose-lose situation really.
Instead, each prestige class should not be one bit better than a core class. It should just be
different. Another reason why I stand on my opinion that the only prerequisites that really work are LEVEL (so that you can design the prestige class starting with features that are already tailored to levels above 1st) and NARRATIVE, because the latter is not really a cost at all! It's a way to tie-in the prestige class with the fantasy world and the ongoing story, at the same time granting the DM control in case she believes it just doesn't fit with either.
Maybe you are right and it would be even better to just not have any narrative requirement specified, and just tell the DM to make up her own. Personally I think it's better that the game tells everybody that every prestige class should have narrative prerequites, and the provide some
example prerequisites. So in case the prestige class does fit with your fantasy setting, but the prerequisites don't, you (the DM) can change them to something else. This is why I welcome having narrative prerequisites anyway. But indeed if they plan to use them as a price for balancing benefits that exceed the norm of base classes, then NO.