35% current health at rank 16 seems incredibly punishing considering that late game damage is quite high and even he will get bursted dropping that much HP to R during a teamfight. I realize that this is less bad at lower HP but Mundo can't always wait that long to R and it's also a chase/kiting tool. At that point, I might prefer to have an earlier rank R so I don't have to leave the teamfight before using R. If he really needs a nerf, I think 20-25-30 seems way more reasonable. Or perhaps, he can get that sort of punishment but some changes elsewhere, like a bit better armor scaling.
TLDR: The nerf seems excessively large. There are plenty of tops and junglers who outclass him (Darius, Camille, Quinn, Singed, Kled, Sion, Kayle, Aatrox etc.).