I definitely didn't think it was too good, but I personally actually found it pretty useful, beyond just destroying ice and walls and stuff. True that it can be awkward to handle around chilfos, since they're pretty quick, but it's still a better alternative than trying to hack at them with your sword. For me though, it's moment of glory came in the Cave of Ordeals, when fighting Redeads, because it meant I didn't even have to get close to them and yet I could wipe the room clean of them in a minute or so. I suppose I can see what you mean about it being overpowered... but the fact that it was kinda cumbersome did help balance it.
Objectively though, I guess it was a bit of a throwaway item to most (a bit like the Dominion Rod). I do agree with Djinn, they did waste it's potential a little bit... although maybe they realised it could end up overpowered if it was say, reduced in size and a little bit faster, and that was their attempt to stop it being? I don't know.