100% agree, penalties are a useful balancing tool IF applied properly. As you said, the weapons need a rebalance, they do NOT need all the penalties completely removed.
I'm not sure I would limit what the player can upgrade using different upgrade paths. I think the increasing upgrade cost does this well already. It would probably be too wasteful to try to just max everything.
The behavior you describe where everything is technically an upgrade, but the player still has to think about how they want the weapon to work is exactly what I would like to see happen. For example, again using the projectile cannon: If the player upgrades randomly the weapon would be better than the base version but it wouldn't be great at anything. However if they had put all those same upgrade points into close range damage, or long range and accuracy, they could turn the weapon into something that excels in different roles. This is what I'd like to see.
