So I have a submersible pump (Which I do not use submerged but just connect hose to both ends) who's output is consistently falling. While guessing for the causes I am tempted to blame one instance where I had connected it to a high pressure source with flow rates higher than the pump's itself. Can such a scenario affect Pump's condition?
The dominant failure modes in motors are bearing failure (lube problems), or insulation breakdown. Both can be accelerated by poor cooling. thus, this being a submersible-pump it may not be sueded for not being submersed. Due to the lack of cooling fins.
there is a chance that the bearing seals distorted and let water thru to the bearings when you had the pump connected to the high-pressure source. there is a probability that the bearing on the pump side of the motor is shot.
Did you also check if there isn't any debris left in the pump housing. and did you check if the impeller still is in one piece.
A pump of that type is intended to be cooled by immersion in the fluid it is pumping. If it is not cooled, the resistance of the windings will go up, the current through them will go down, and the torque applied to the impeller will go down- and the pump output will decrease. Can you feel it getting hot?
Also, can you tell how fast the motor is spinning if you run it dry for a couple of seconds?
By the way, that seems to be an absurdly expensive pump for its rated specs!