I have to say, the advantages of a melee character are there, you just have to realise what they are.
1. When a melee character uses an AoE, it only hits the enemy. For spellcasters, they manage to blow up the melee guy standing there (or another caster if they got swarmed by the enemy). 2. Melee hits early on are much more powerful, the 400 points quoted could be achieved with an orange weapon at level 7 (assuming no absorb of course). 3. Melee is not just about melee, they can help someone stand up, throw a big heal as a last resort, even knock down from range. All before leaving Cyseal. 4. Scoundrels deal less damage (I've yet to see a dagger hit for 100, per swing, since if a 2h can crit for 400 at a cost of 4 aps, then a dagger should manage 100 per swing for 2 aps to be the same dmg per ap) but they have given scoundrels more CC. If hasted, I can throw a stun, blind and knock down in the same round on separate opponents. Caster CC is generally more expensive, leading to more prohibitive useage.
Also, while Str chars do get more damage per swing, Dex ones have the option to pull out a bow, ricochet for some nice AoE and then fire a special arrow to deal some hefty damage.... before teleporting to stab the enemy mage in the back.
So no, I disagree melee is terrible, I also think you need to go back and re-examine what terrible means, You can play an all caster group because you personally think it's better, sure, but I intend to keep going with my 2 caster, dex and str party doing just fine.