I've written before about Character Design in Nier. After thinking on it some more, I've been trying to understand why Kainé's design doesn't offend me.
She is pushing the limits of decency, and it's a bit uncomfortable. I did actually think a lot about it while she was following me around, and my discomfort about her appearance never quite went away.
At the same time, I can see a logical reason for it. She has insecurities that make me understand why she might want to rub her femininity in people's faces. For me, that made her more acceptable than some more modest (but still highly sexualised) character designs in other games.
She is also anything but submissive, and happy to throw stereotypes back in people's faces if they pre-judge her based on appearance. Overall I find her much more empowering than objectifying. I considered my slight discomfort well worth it for how much it forced me to think. I believe in Kainé as a character, and choose to accept her as she is.
Kainé has reasons for her look, and I think is intended partly as commentary on female character design in general. That made me okay with her appearance, but I know I'm walking a difficult line when I write about this. My question, really, is once you start complaining about character objectification and sexualisation, is it ever okay to sexualise a character? My response would be that its acceptable in an appropriate context or with a good reason, rather than being gratuitous.
Of course, my definition of what explanations/contexts are acceptable is going to vary from someone else's. I suspect I'm one of the few people thinking about these issues who considered Kainé somewhat progressive and empowering rather than insulting.