The opportunity cost in combat for a 17th+ level character spending an action is extremely high. This does not advance the party in the combat at all, just makes this one particular character hard to kill via normal HP attrition. That's enough right there.
Shape-shifting in combat is needs based. It's an option if needed but could be done after combat.
I see your point, though. Healing in combat is typically a poor use of action economy, even with big numbers and whether hp or thp, an more the result of things going poorly.
Limiting the number of shape-shifts to topping up outside of combat would also result in less thp for opponents to go through. I'm thinking reasonable gameplay leads to a lot of thp with the option for more as needed at the cost of that action.
The refreshing of tHPs aren't actually an issue at all, since they actual limitation on the spell if getting attacked is losing Concentration, which would happen well before that first 300 HP form is lost.
A catch-22 argument. The more the caster uses the thp the more likely the caster is to lose the ability to generate more thp. It's a good argument.
According to the damage chart in the 2014 DMG (pg 274), a CR 17 creature averages 105-110 per round in damage (assuming hits). A party of 17+ would be facing a bunch of these. Even if you halve it with multiattack, we're look at 53-55 damage a round, or DCs of 27 per hit, with potential multiple hits per foe. And that's assuming multiple attacks: If it's got one big attack the DC is out of range of bounded accuracy even if you roll a 20.
Damage per round increases beyond that, so Concentration DCs continue to grow.
This argument I don't agree with. The DMG charts were off and if this were true a 17th level wizard would be unlikely to last 1 round with a CR 17 monster, let alone 2 rounds, and a bard or druid isn't fairing much better. Our shape-shifted spellcaster is still a spellcaster, but with an influx of thp to prevent dying quickly.
Those damage numbers are also the result of multiple smaller attacks. Look at an Adult Red Dragon for example. Several attacks but none of them is higher than a DC 10 concentration check individually. It's possible to have a +9 save bonus and make every single one of those checks without needing to roll. The only attack doing enough damage to break that concentration is the breath weapon, and that's countered by shape-changing into a form with immunity to fire damage.
In the dragon example changing into a Fire Giant grants immunity to that damage has +6 CON bonus to the concentration save plus either proficiency or advantage or both to effectively make the losing concentration to that 17 CR monster's attacks impossible.
The player needs to know how to use this spell to it's extent, which includes things like damage immunity to avoid big damage if possible.
You've convinced me that the spell is not OP. I think it's improved but there are valid arguments that prevent the OP concerns.