Haven't tried it yet, but it seems like a coup de grace kind of skill to me, where you use it to basically end fights so you don't have to worry so much about the armor loss. Or you use it if you have no armor already. Or if you desperately need a particular skill (like magic shell to cure a stunned ally). It's extremely versatile.
Imagine raging, and whirlwind and crippling blow a group of enemies and knocking them down with battering ram, then skin grafting and AOE critting AGAIN. That's a recipe for wrecking everything.
A 2-3 AP cost with a cooldown would be much more of a nerf than a buff. You'd need to make the ability at least 6 turn cooldown, and a lot of fights would be over before you'd want to use it again anyway. I mean, it possibly NEEDS a nerf like this, and maybe an AP cost with a cooldown is the right direction, but if you're looking for a buff, I think you should consider a different tweak.
I don't think having a large number of skills necessarily negates the value of skin graft. First, some skills are simply better than others and have longer cooldowns. And also each skill generally provides a unique or powerful benefit that you might want in a particular situation (especially something like magic shell or whirlwind). Finally, there's really not enough skills yet for characters like pure rogues and warriors to necessarily ALWAYS have an offensive skill available.
