The whole counter-counter-counter things is only an issue when you have a ton of arcane casters, and even then, there are only so many reactions a party will have in a given turn. I am not suggesting that it isn't a problem in some campaigns as it obviously is, but I feel like this is more of a niche problem with multiple arcane casters than it is a problem with the spell itself. Generally you are burning a spell slot to cancel a lesser or equal slot, which from a balance standpoint seems fine, and you are rolling a base ability check to counter higher level spells (so no prof or skill mods) so with an 18 INT its a 50-50 scaling down, or you can upcast and take the guarantee. None of that makes it seem unbalanced and it's inherently reigned in by the action economy. It's also limited by the need for sight to the caster while casting (in addition to the short range), which is something a clever party could use tactically. Further limiting is the pace of resource use - a caster who is both casting and countering each round is burning through resources at twice the normal rate (other than cantrips of course).
I think the counter-counter-counter feel to encounters is also at least partially a matter of choices and narrative. Are you going to unlimber the big guns early, or see if you can slide some smaller damage through and maybe draw out a counter? Any time a caster uses counter on a 1st or 2nd level they are losing. This kind of probing is common in a lot of games with dispel mechanics, and mostly I find it adds to the tension and tactics rather that taking something away.
IDK, it feels like there are a lot of naturally limiting factors at work.