I agree completely that the new system is a mess. I understand that it is a result of the new combat design philosophy.
Here is the philosophy for D:OS2 combat design:
"EVERY combat encounter MUST have screen-wide multiple poison explosions on turn one and every turn thereafter, alternating with turns of screen-wide smoke. Combat = environmental effects"
This is hard to balance if you allow the tame old initiative system because it allows you to kill most anything on turn 1 given that environmental effects can be chained so easily an so powerfully.
So I understand the decision, though I abhor it and the whole new imagining of combat. It was perfect in the original form of D:OS1