Well, from a Deck Builder's point of view I think that Denethor and Faramir do directly compete each other. As has been said, they are both 4Cost Leadership allies, which means they are likely to compete for the same slot in a deck. And there I would - given the current metagame - always prefer Faramir because he is less likely to end up being close to useless.
In general it seems (probably no accident, too) that the core set cards are powerful...very powerful. There are already so many new cards out, but still there are many staples coming from the core set, which is a bit surprising. I would expect that the new Denethor should be more powerful in a pure Gondor deck given the current cycle's theme. This would reward me for building a thematic deck with lots of cards from the new cycle, something many players like.
So, rather than debuffing Denethor conditionally I'd have added some Gondor-related conditional buff such as Base willpower 2, but +1 WP for every Gondor hero or so. At 4 cost this would give me a 5 WP ally in a purely Gondor Deck. Insane! Admittedly a bit too strong, but you get the idea ![]()