Well, the spell was intended to be balanced in two ways:
1. The spell has a long-ass casting time. This means that you only can use it as a story effect, really.
However, since you can get it as a spell-like(by using something like Archmage or the FR Player's handbook feats), you can now use it as a combat action. For lazier people, you can just get it as a scroll.
2. You are only supposed to be able to steal powers from guys you encounter, meaning that the DM automatically controls your access to powers.
However, since you can summon monsters(using Planar Binding or the Summon line of spells), create undead, or just generally cast divinations and go Pokemon and catch 'em all, that is generally a sham.
It also means that the DM now has to think "hey, I can't use that monster since this PC can totally steal its powers."
Now, that's how it was intended to be balanced. We can see that both don't work as intended with even a little work.
Now, the spell is conceptually broken for these reasons:
A. Trading lesser powers for greater powers. The player can drop a single use of a level-appropriate ability for something much more powerful and usually usable at will, meaning that from a ECL standpoint, he can be rocking encounters with "I win" powers.
Its the same as saying, "lets give this mid-level mage free Wishes. I'm sure his game won't break."
B. Being able to customize your powers on the fly. With a garden full of petrified enemies, you can teleport home, steal a power, and be back in time to rock an encounter with that power.
C. Monster abilties are designed to be unbalanced. For example, if a mage wanted to get an at-will Supernatural Disintigrate without this spell, he's blowing 2 feats and a 17th level (epic) slot.
Monsters are built with the "glass jaws and laser beams" philosophy, meaning that they get powers that are too big for their level and compensated with by crippling weaknesses("great cosmic power, tiny tiny living space," to quote Disney's Alladin).
When a PC can get that laser beam and not be forced to take the glass jaw, he wins. At least Shapechange makes you look ugly and take the flaws, even though its broken in its own way (
Check out the "Fun with Supernatural abilities" thread).