I've played against many amazing spies who did not use the Dead Ringer and were fully effective with the the default invisiwatch/cloak 'n' dagger. If you main spy and were solely dependent on the Dead Ringer, I'm sorry to say you were dependent on a crutch.
In highlander, I think most people would agree that Acooma was one of best spies to play. His ambassador aim, especially for the time he played, was so far ahead of any other spies at the time. In his matches against really low level teams, you can just watch the guy just destroy teams by spamming the DR and ambassador (this isn't even the most impressive showcase of his aim, he has many great clips I'd recommend watching). Yet against higher level teams, he would usually run invisiwatch and focus more on getting backstabs than use his impressive amby aim/dead ringer.
The second paragraph is purely meant to drive the point that spies can be insanely good still by actually getting good with the weapon that actually lets them instakill enemies. My spy awareness isn't as good as it use to be, but still currently playing highlander there's still plenty of spies that are good with timing and not needing a crutch to use to get behind enemy teams.
About the ambassador, I think it's pretty pointless to how most spies use it. I think it's incredibly solid unlock to the point of being broken in situations that involve you just trying to get away or perhaps any 1v1 situation but spy being such a fragile class him having an unlock that can help him escape those for having decent aim is pretty fair. Having it used as a second sniper though is just flatout annoying. That -102 damage actually practically means nothing against most teams that know what they're doing. That health can get healed up in almost a second via crossbow, or it just about gets rid of a buff on the more aggressive classes. It barely slows down pushes. The second sniper thing was almost only useful on pubs where healing was fairly irrelevant or where players had no idea what good game fundamentals are (if you are going to contradict me with the Acooma clip please keep in mind the skill gap between mTs and the team they were playing in that match. Acooma could've been doing anything he wanted and would've looked godly. I chose that clip to just help showcase his skill with the unlocks)
I mostly agree with the nerf Valve gave the ambassador. Make it good at actual sensible ranges that a spy should be in. The best thing I can think of is to fix that distance a little bit? Most spies have been complaining that even in fair ranges they haven't been doing enough damage with a headshot. In general though I agree with the direction that Valve are going with the weapon.