I think the answer is that displacing passengers from LB to Canada Water dosen't necessarily cause a capacity problem:
In the morning, commuters from Forest Hill traveling towards Canary wharf change at CW instead of LB, so capacity at CW is the same. Those travelling from Forest Hill to LB and further west are additional between CW and LB, but the line is not full on that section in the morning (it fills up at london Bridge). The opposite applies in the evening.

Have to say its a couple of years since I used this route regularly so things may have changed.

Agree, but one frustration is that the escalator between the ELL and the Jubillee gets so crowded at the peak that you can't walk down on the left (only place I've regularly experienced this outside the tourist areas), so there will be quite a wait to get between platforms. It dosen't take long, but you know how patient we all are in the morning!