As a RDM raider, I hope I can answer all these questions.

1) At higher levels of optimization, RDM holds a firm "last place" in damage output. Even behind bard. There's evidence in the logs to support this. The main reason for the popular opinion of "insane damage" is actually quite a simple one: RDM has probably the lowest "skill floor" of any dps class. The amount of effort needed to unlock, say, 50% of another class might be enough to unlock 70% of RDM's potential. At lower levels, RDM already has 300 potency spells, which makes it stomp on low level content. But again, in terms of personal damage + raid damage, RDM is dead last.

2) Vercure and verraise ARE very good. But the nature of that utility ends up creating a unique situation. In learning a fight, a red mage is invaluable. In farming a fight, a red mage is bottom of the barrel. The way me and a lot of red mages see it, if we're talking about balancing a class, it should be balanced around the level of play where the balance actually matters; and in the higher levels of play, you're ideally not even gonna use vercure or verraise once. This means these abilities, essentially, do not exist as utility. When you take those away, you're left with embolden. And embolden only affects physical damage and has a decay that diminishes its usefulness.

3) "useless" is a strong word. But, as I spoke of above, in the higher tiers of play during farming and such, most of red mage's utility might as well not exist. Because of this, you're left with the weakest personal DPS class that has not-strong-enough raid damage to back it up. Because of this, every other dps class is technically a better choice.

All of these factors lead to a very binary existence for red mage. On the one hand, we're considered completely invaluable for progression and pug content. On the other, we're pretty much not even worth considering among the best of the best. And as I said before, the balance of class should be balanced around where the balance actually matters.

One solution I've seen thrown around, and one that I favor, is to nuke away the extreme of RDM's utility in favor of general potency buffs. For example, if you made VerRaise an ogcd ability with a 60-90 second cooldown, we'd lose our identity as "walking healer LB3" and we'd be able to get better personal or raid damage.