Why an all-submarine German navy would be easier to counter

Would a German navy restricted to submarines have been a viable way to recover naval power?

No. It would create a narrow, predictable threat that Britain could counter with mass-produced anti-submarine escorts while Germany lost surface-warship skills and options.

Banning German surface warships would damage both naval capability and the industrial skills needed to rebuild it. Britain could answer the predictable U-boat threat by steadily producing treaty-compliant anti-submarine sloops while avoiding the diversions caused by German surface raiders and capital ships. The scenario shows why a varied fleet imposes harder choices on an opponent than a single-specialty force. A submarine-only navy would be dangerous, but easier to anticipate and counter.