"a counterbalance spinning opposite the rocket gets released at the same time, preventing the tether from becoming unbalanced and vibrating into oblivion"
Yes, but where is it released? Because if it's at the same time and the rocket goes up, the counterbalance goes down. And that means a big explosion right under your infrastructure.
Exactly - the energy of the released counterweight will inevitably produce an explosion as it's stopped pretty quickly by something. My question was how big an explosion. The answer is pretty big, but this probably isn't their biggest problem.
500MJ is enough energy to flash-boil 200Kg of water, so that might work. Would be a sizeable steam explosion, as the 330 or so cubic meters of instantaneously created steam tries to go somewhere, and an interesting pressure wave in the water tank.
"interesting" -- the concussive overpressure would be brutal in water and travel further I guess, maybe you could add a bubble stream to the water like in dives to diffuse the shockwave some.