I know I am tldr'ing your post a bit, but if I could add what I think the main issue is, it's not the balance but the fact that Initiative is not a *roll* but a *stat*. Whenever you make Initiative a stat, and not a seeded pre-combat roll you end up having a lopsided combat system. Either pro enemy, or pro player (or really, pro whoever starts combat first).
For example, first striking out of combat could NULLIFY initiative, meaning after that you basically skip a turn. This would fix issue 1 (first striking). But as long as Initiative is not a roll in combat in general, all combat would be either us moving first or the enemy moving first if we first strike... that's not fun either. (And since we would have to apply it to the enemy, an enemy who attacks us FIRST would have to skip the next turn, especially with the lethality of the spells in D:OS
For me to make D:OS have a decent combat we'd have to restrict how real-time works to begin with... casting spells out of combat at enemies is a major issue. And nothing we cab do will ever fix it.