Larian knows there is a balance problem. However, when you get a minor cut on your arm, the first step you take should not be "amputate".
Some of the issues are that skills do too much damage, and that they ignore enemy resistances and armour. That makes normal attacks much less interesting to use. Once that's fixed, normal attacks will look much better.
Getting better weapons and armour as you level up is standard for RPG's. This game is not a completely radical departure into bizarre and unfamiliar territory.
Part of the reason for the beta is to balance the game. You can do that without scrapping basically all the game's mechanics and starting over.
