The hitbox seeming to be in front of the model is just a result of higher ping time; the collision detection definitely seems to be done server side, so you need to aim at where the character or horse will be by the time your attack message reaches the server. In any case doing the calculation locally would have many problems, since the result would differ on each client, and swapping that responsibility around to keep things fair would not feel consistent to anyone. This issue makes cavalry much less playable than the other classes for me at 100+ ping; because of the combination of needing to guess correctly where my enemy will be to hit them, and the horse "rubber banding" around the place much more violently than when on foot because of the higher movement speeds.
I tried connecting to a dedicated server running on the same computer, and fighting against bots: the difference was obvious; I could actually aim at the horsemen rather than at empty air to hit them, and my manual blocking success increased considerably compared to fighting the same bots at 100 ping (I used the fastest combat speed as well, the remote servers were at normal speed).
The main issue people have with horseback slashes seeming worse than the previous release version is that you can now aim and choose the direction of your slash with the new system. In the old system you could only choose the attack stance (with only one side slash direction for each side of the horse) and the height of the swing; in the new system you can freely aim any stance in any direction all around the horse, with the restriction that you can't swing through the horse (mostly); this means that you have more options available with the new system, but you need to use more skill and timing to perform an effective attack. This is the same sort of thing as the change to the couching system, where in the old one the lance was practically fixed to the side of your horse, and always lowered, but in the new one you must commit to an attack and aim it manually. For those wanting to go back to the old system, if I recall correctly Armagan himself basically said "not going to happen". The new system has taken me a bit of getting used to, but it seems some players are able to use it quite effectively.