I know ksp is not real life, and I know balances are made between fun game play and science fact. From reading commentary on the subject it appears the prevailing thought on why the LV-National needs to be made unrealistically weak is due to the lack of challenge or enfine diversity due to the obsolescence of chemical rocketry.
I would argue that the same could be said of jet turbines vs piston driven propeller craft. There are piston driven propeller craft today, but they are dwarfed by the number of jet turbine driven aircraft, weather turbojet, turboprop, or ducted fan models.
So if you are really feeling the need to have a reason to use a piston engine turning afree "unlocking" jets, then just reducing the thrust of the jets would work, but it wouldn't be satisfactory.
So instead of making nuclear rocket engines weaker, give them downsides that make them NOT the only solution to every problem.
In real life, craft with this type of engine would have a "shadow sheild" to protect he crew from radiation, as it would be too heavy to sheild the entire craft. Trying to simulate complex radiation emissions and shielding is obviously beyond themail scope of the game, and it doesn't address existing space radiation or shielding for long term deep space missions.
Maybe a useful compromise would be to incorporate a heat shield like solution. Treat radiation like reentry heating to a degree, and require that the ships be built in a way that the non hardened portions of the ship lay in the "shadow" of your radiation sheild. Parts or kerbals extending beyond this shadow during engine ignition would suffer heat damage and go poof.
You would need a simple way to show this during ship design, maybe something as simple as a shadow map style overlay view or a stage recovery style colored overlay.
So in summary, by fudging radioactive emissions of the engine as a balance against their superior thrust and isp would allow more interesting design decisions, not less.
For example: if the engine blows up the launch pad you still need chemical rockets for a 1st stage booster. Maybe a special atomic rocket launchpad could be an end game goal.
If you are going to make an atomic rocket tug, you'd have to make sure the cargo won't be damaged, and more to the point you may need chemical rockers for maneuvering close to a space station or any other craft when rendezvous and docking.
Finall like a heat shield, it adds extra weight, so the better protected your craft, the heavier it's dry weight, so even if the LV-N had better thrust and better is than any chemical rocket, you wouldn't use it all the time because it may just make more sense to build a simpler and lighter craft than deal with the reaction control needs of a larger heavier craft.
Right now for my personal use I un-nerfed the lv-n because it's a single player game and I can do what I want. However I'd rather see an official fix that keeps their real life awseoeness without making them a boring cure all to every problem.