1) I wouldn't call them overpowered. They aren't really transformational to a group in the same way that a good Enchanter or Bard or Shaman 50+ (slow is OP) can be. But they are certainly powerful. A Monk who knows how to pull well is a huge asset to a group.
2) Yes, in a purely numerical, best-case scenario, non-disc defensive tanking situation Monks are actually the best tanks in the game due to their extremely high avoidance (Block is OP). And high AC Velious gear brings their mitigation on par with Warriors.
3) Here's the rub: while on paper Monks are the best tanks, in practice this is rarely the case, because the game is usually messy. Monks have no way to grab snap agro like a SK or Paladin, no way to reliably interrupt casters like the other tanks, and no real utility to offer the group (i.e. Paladin roots and heals, SK snares, even Warrior snare and slow procs add utility the Monk lacks).
Basically, for a Monk tank to be outright better than a Knight or Warrior requires both an extremely well-geared Monk and an ideal situation (mobs that are not too strong, no casters, and groupmates who understand how to play around the limitations of a Monk tank). As a general rule of thumb, an XP group is always best served with a Knight tank, and a raid will almost always want Warrior tanks. Monk tanking is not ideal in the vast majority of player situations in EQ. The Monk's real power comes from being an excellent puller, excellent DPS and a serviceable tank when needed. It's the ability to wear many hats well rather than wearing one hat (the tank hat) exceptionally well that makes Monks so good.
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