It did start you at level 5, but your HP would have been 40/80 instead of 80/80 like it should be for a level 5 start.I'm not sure what you mean by "right now". Playing the 9th November version of Beta 3.3, the "Assassin" storyline started me off at level 5.
As per yesterday's release, this should all match up properly.
Indeed I made that change in my local initItems.c, but failed to put it in yesterday's update.As for the Hibernian, I set its rarity to 0.03. It's still fairly common, though as "Assassin" is set in the "Spanish Main" period, a lot of swords which become available in "Golden Age" don't exist so there is less competition for the Hibernian. But at least it is no longer the standard equipment for every enemy.
Will be in the next one for sure though.