Honestly, the more I think about it, the more I think that providing some lore on, basically, "Location-based power" might be necessary.
I mean there's a general consensus that Blizz sort of wrote themselves into a corner in terms of one-upping themselves. You already defeated Diablo as the "Prime Evil". What more could there possibly be to do in the Diablo universe?
However, if you say Diablo would be strongest in Hell, specifically in his domain, then you could say that he'd be weaker on sanctuary. Where would he be even weaker? Heaven. Weakest? The pinnacle.
So you could say "Yes, you fought the Prime Evil - at the one place in the universe where he'd be his weakest." That could at least provide a plausible excuse. Unless Blizz wants to pull out AN EVEN BIGGER, CRAZIER, MORE INSANE bad guy for every expansion. How many of those do we have left anyway?
But that means you will have three new problems:
1) If the demons were stronger in hel, then the angels would have to be stronger in heaven
2) if the angels were stronger in heaven and the demons were weaker in heaven, then how the heck did the demons ever get so close to breaking into the heaven and destroying the crystal arch before? the angels could just stay amassed in heaven and thus create a force far greater than anything that hell could throw at them
3) we fight azmodan in his stronghold. he is as powerful in that stronghold of his as he was ever going to be, and he was a pushover there.
So location based power makes no perceptible difference.
The easiest way for Blizz to write themselves out of the hole is to have our character become a god and then make one of the conditions of being a god being an inability to interfere in the war between angels, demons, and the inhabitants of sanctuary.