title pretty much sums up my question.

Does the "converted" leader counts through the limit of 8 Leaders?

It counts toward the limit of 8 leaders - it's an Imperial leader until the end of the game.

So this is a pretty huge nerf to this card then, or am I over-reacting ? (note: my Rise of the Empire copy is still shipping; I haven't played with it yet)

I feel like having more leader than the rebels was basically a requirement to get the upper hand. Otherwise it feels pretty hard to assert dominance and find/destroy the base quickly enough when they do so many missions every turn.

3 hours ago, Amuny said:

So this is a pretty huge nerf to this card then, or am I over-reacting ? (note: my Rise of the Empire copy is still shipping; I haven't played with it yet)

I feel like having more leader than the rebels was basically a requirement to get the upper hand. Otherwise it feels pretty hard to assert dominance and find/destroy the base quickly enough when they do so many missions every turn.

Not so much, at least in my experience where the empire can dominate either way, you just have to let the rebels do many missions unopposed while you movilize your forces to control the galaxy. Also, if you use Lure of the Dark Side after turn 5, it's true that the imperial player should remove one leader (if they didn't get one eliminated already), but if the rebel player is using the core mission cards or the expansion ones but doesn't have the ones that let him recruit, he'll still have 1 less leader than the imperial player (he'll have 7 and the empire 8).