I thought you had indicated about a factor of 2 reduction; based on the reported numbers for bandwidth used, I was waiting for more of a factor of 10 reduction.
Does the rainbow forest make things too easy? With the current "Drop dyes" instead of "Drop special items", not really. No hostile mobs? Mushroom islands. Lots of mobs? You probably have a farm anyways, and if you didn't, now you do.
I cannot help but notice a lot of this is in direct opposition to what you were saying some weeks ago about the biome.
Oh? I'll review what I said back then.
Rainbow trees as a renewable source of dyes: Not really a problem. Vanilla green and brown are farmable, most people have white from farms (I don't), black isn't that hard to get if you look around for terrain that is favorable (or use mystcraft to make favorable terrain). Heck, even a desert in large biomes, plus two buckets of water, will work just fine.
Red and yellow are absolute PITA's to farm in 164, but are "almost trivial" in 1.7 -- one bonemeal per dye. Lots of mods add colored flowers that can be converted, giving far more supply of them. Getting these two as farmable in 1.6 isn't bad.
Blue, Lapis, is the only oddity, and in vanilla 1.6 the only use for it is either decorative blocks or dye. Again, vanilla's oregen gives you more than you know what to do with, so while it's not farmable directly, there's rarely a shortage either. How that will change with the 1.8 enchanting revamp? No clue. But again, a farmable dye isn't really a problem.
I do remember when brown was rare, and cookies were a real trophy.
With regard to the rainbow biome itself: (surface): It's arguably more powerful, early game, to find one than it should be. Mid-game, it's nothing. It gives you lots of farm animals; by mid-game, you've got a farm, but you might be short.
As a biome where you can mine stuff, with no risk of hostiles? You've gone from rare, hard to find, smaller than normal biome mushroom island, to much easier to find, full-sized, rainbow biome. This is the only issue of balance that is "big" in vanilla with rainbows. Easier to find, larger when you do find it, and just as free of mobs.
(NB: My understanding of the biome placement rules is basically "zoom and fuzzify, repeat". Normal biomes are placed in the first step; mushroom islands are placed after one or two zoom-in steps, so they will be 1/2 or 1/4th the length (x/z, each) of normal biomes. Rainbows don't have that smallification.)
Mystcraft age, rainbow forest, single biome? You can't be expected to balance for that. But it definitely becomes an issue.