They seem to be useful only for the chest opening. They are worse than fighters in every aspect with lower hp, worse equipment selection and worse fighting ability; they cannot cast any spells and don't have any special abilities like stealth or striking from the shadows. When in the first row they are likely to be eaten by monsters; in the backrow they are safe but useless. It kinda looks like the most optimal choice would be using thief as sort of "seventh party member" who is used only while looking for loot, but it sounds like it would be very annoying to do.

If you have an Evil thief there is a certain dagger (very rare drop; I've never seen it myself) that will turn him into a Ninja if activated. Apart from that thieves are pretty much essential to avoid nasty trap damage.

Yes, I have heard about the dagger, but it doesn't solve the problem, it even makes it worse - you have been carrying useless thief only because traps are deadly and now instead of thief you have ninja who cannot disarm traps.

Thieves and Bishops are really just characters who you take for just a single purpose. Thieves are there solely to deal with traps and Bishops (at reasonable levels) are really only good for identifying items (unless you're playing the Apple II version, in which a Bishop can quickly give you enough experience to reach level 200+ thanks to a well known bug, among other things.)

There is an alternative to using a thief. Have your priest cast CALFO when you see a chest, and then, if the trap looks like something you could survive setting off, try to disarm it.

The mechanics of chest traps actually are something like the following:

Inspect chance is (capped at 95%):
For thieves: AGI * 6
For ninjas: AGI * 4 (you might want to use CALFO instead)
For everyone else: AGI * 1

In other words, only thieves are good at inspecting traps (ninjas are not), but fortunately, CALFO exists.

Everyone can disarm traps. The chance is based off your level (AGI and Luck are irrelevant here, though Luck may help you avoid the effects), but Thieves and Ninjas get a +50 bonus. This means that a level 51 fighter can disarm chests as well as a level 1 thief. Of course, getting to that level will take a while unless you are playing the Apple II version and taking advantage of the Identify glitch.

By the way, that dagger that lets you change a thief to a ninja has no alignment restriction; you can actually get a neutral ninja this way. Be aware, however, that neither level nor XP changes, and ninjas take far more experience to level up than thieves. Therefore, if you do the change at a high level, you may end up many levels behind on XP, to the point where being level drained (or casting (MA)HAMAN) may actually *increase* your XP.

Feel free to ask any other questions you have about the game mechanics.

By the way, when creating a replacement thief, you want at least 16 AGI to reach 95% inspect chance, and ideally 18 to drastically reduce the chance of the stat dropping at level up.

Having 18 Endurance is probably even more important, to maximize chances of Resurrection when traps blow up (which they will do sometimes no matter how good you are).
Personally I max out Endurance for all my characters, then allocate the rest of the points.

High HP isn't as good as you think, as it only protects against damage. It does not help against status ailments, level draining, or many of the other nasty things that enemies and traps can do.

Luck is the stat you want if you want to be able to resist trap effects.

Agility is tremendously helpful in combat, especially for mages, as it allows you to act before the enemies. At 18 Agility, you will act no later than segment 6 (out of 8 segments). This means that, even with the worst possible roll, you will go before 2/3rds of the enemies. 20 Agility (not possible in Sir-Tech Wizardry games (except via stat underflow), but possible in some Japanese ones, including NES Wizardry 2: Knight of Diamonds and SNES Wizardry 5) will *guarantee* being able to act before the enemies.

Here is how initiative works:
There are 8 segments, with segment 1 happening first, and segment 8 happening last.
For players, roll 1d8, and subtract -1 per point of Agility past 15, minimum 1.
For enemies, roll 1d6+2. (Note that this means no enemies get to act in segment 1 or 2.)
Then, in each segment, the party acts first, followed by the enemies. Note that players earlier in the lineup get to act first if both are acting in the same segment.