Instant Healing being a toggle is never what overpowered Regen IMO. Stuff like being able to stack Dull Pain and being able to build (pre-ED) where a Regen scrapper could tank Hamidon with little support was. We had a Spines/Regen scrapper (who the name escapes me right now but perhaps someone will remember it) that used to tank Hami for us on Triumph. However, building to be able to tank Hami gimped the DPS to the point of being useless, so there was a trade off there. Again, this was also pre-ED - everyone's favorite update.
Regen always had (and still does have) its drawbacks - poor Alpha Strike mitigation (without MoG) and little to no -regen -heal debuffs.
I had wondered whether IH should have been kept as a toggle, but work something along the lines of Tough Hide or Phalanx Fighting where the regen %was based off the number of enemies in melee range instead of a flat X% regeneration.
Not sure of what would make this set better.... my main back in the day was MA/Regen, but I have since re-rolled her as MA/Nin or MA/SR. Regen is just too bland now IMO.