Imps are just so good
Maybe I wouldn't exactly say that it's strong generically. I'd say it's strong to open with because of Imps, pretty strong early, ok overall, and well-designed because getting imps is hard. With the modification, it's very strong at every point and pretty boring.
the powerlevel question seems noncentral though; the point is that it takes away interesting decisions.
Which interesting decision is taken away? Be concrete, what would you do with the Heirloom that you would not do otherwise (except getting Tormentor more often which is not about decisions but the power level of the card).
Tormentor is a very weak $5 which you will never ever buy early if there is a junker or trasher. You will only buy it later if you got the terminal space for a terminal Silver with a weak Attack on top, which is quite rare.
Of course gaining Imps is very strong (but then again, with Lab variants in the Kingdom, Haggler can do the very same thing far more consistently) but you cannot pull that off often with Tormentor so why not buff it? It is not like we talk about buffing Mountebank, Cultist, Coven or some other ridiculously overpowered Attack but buffing a very weak and random Attack.
There is a reason so many Hex Attacks violate the terminal Attack principle: the Attack is weak and random. Nobody would e.g. ever get Skulk because of the Attack, you either want the Gold or are in dire need of the extra Buy. The Hex Attack never matters decisions-wise.
It's not really fair to ask "which interesting decision is taken away" and then exclude the category of decisions that is often most interesting with Tormentor. With Rack, Tormentor becomes a incredibly strong buy. This by itself isn't a bad thing, but in order to be a interesting strong card you ideally want to make it change the game in a way that forces you to play substantially differently than you would without the card. You can see this in official cards like Cathedral, Stockpile, and Goons - all three of these cards are incredibly powerful but they also fundamentally change the way you have to approach the game. In contrast, a more powerful Tormentor offers relatively little - getting 3 or 4 Imps is usually not going to change how I want to build my deck. Non-heirloom Tormentor's lack of strength is what makes it interesting - it can be viable to go for if you want the extra draw but it also isn't an obviously correct move.
This isn't really related to the card design aspect but I feel like I have to respond that Tormentor is, IMO, not a very weak $5. (I've interpreted "very weak" here to mean somewhere around Fool or below in power level). It's mediocre, but saying that you don't want to buy it early in the presence of a junker or a trasher isn't correct. If we're talking about Witch and Steward, I think it's reasonable to say it will be ignored. But with weaker junkers, like Jester or Sea Hag, this question is far less obvious. Same goes with weaker trashers, although not as much - however, there are a decent amount of trashers that can still be played while still getting an Imp gain, such as Exorcist and Loan. The attack is also sometimes very relevant - stacking Hexes really hurts in a way that few other attacks can. Your comment about Haggler here confuses me; Haggler's not particularly good at buying Lab variants most of the time because a) it needs to have a Lab variant present in the kingdom which is rare considering how few Lab variants there are in the game and b) many Lab variants cost $5 whereas Haggler is best at gaining >$4 costs.
edit: This all being said I like how Rack works as an Heirloom (a permanent but weak source of Villagers sounds like great gameplay), I just wish it went with a card that was less boosted by its presence.