Mathematically yes it is that penalizing it's a limiting facter that no matter how hard you try you can't break that average of one instakill per 15 seconds. It's a 1984 esque orwellian mask we all have to wear so one is not more beautiful than the other to make all necro dc's equal. It balances out all instakill casters and lowers them in the tier of things but it doesn't change the caster vs melee dynamic.
If this system does go live my wizard will become a pale master nuker taking all three mental toughness feats and evocation magister or draconic destiny. Keeping the pale master defensive benefits that are so good. I will keep both wail and finger on the bar but they will become secondary options and I will still outkill melees by double in groups and still solo most content.
Maybe there shouldnt be a balance between casters and melees in trash killing. If everything kills trash equally yet in a different method I find that boring. It would probably require rewriting the whole game and making it extreemly wow like. Maybe melees can be balanced out in other ways like being better at non trash.
My wizard can't put out the kind of dps that a melee does in extended raid fights.
Of course I enjoy the current caster melee dynamics and I play more melee than casters I have my pale master and one first life sorc thats just kind of there versus 7 melees which I play much more than either caster. I enjoy the current mechanic much more than pre instakill epics. Mostly because It's a challenge to kill something whereas before it was a beat on something with blue rings and if it broke stun it. I make no assumptions that being a melee I should be as powerful as a caster it has never been the case in this game except for the first 5 levels or so. It still doesnt mean its not fun being a melee and they too can be very powerful and easily dominate content and more challenging.