Is combat still really un-balanced? I have the original cd, but back when I used to play it, if I wasn't a melee character I got pummeled in real time by any melee character. Is there any way to balance this? Thanks.

There are a few threads about playing a gunslinger type character on the boards here. Another option, to help even things up, is to play in turn-based combat. Helps a bit when you're swarmed by rats or manacondas.

I would say so. For gunners, it's pretty hard early on, and then too easy after you get good weapons. I haven't played as a mage, and melee is generally pretty easy, but balanced.
The real-time always struck me as too fast, so I play turn-based, which helps with the balance a little bit.