Never played it before, about to start it sometime soon. Can it be played with a melee character or should I invest in magic (casting) too? I like the idea of just having to rely on other skills than magic for survival. :)

It's not very important. But some defensive and utility spells are nice to be able to cast.
Personally I favour the Druid, since he's got decent STR, good Lore skill and a good balance between fighting and magic capabilities.

Getting a decent (at least 25 out of 30) STR is perhaps the most important consideration of all, since the game will be rather frustrating when you can't wear and carry as much stuff as you'd like. This also favours picking a fighter type character.

And playing pure Mage is HARD...

Druid is good, fighter is probably easiest. Little bit magic won't hurt (light, food)

Magic is an all-purpose utility skill in the Ultima Underworld games, and even if you have a heavy focus in the skill, it doesn't hurt to have at least a few points spread around in other things that you'll often find yourself doing, since using magic all the time will be inconvenient and potentially impractical.

For example, a few points in Acrobatics will allow you to jump/fall down places that would otherwise be damaging or require the use of Slow Fall - and if it happens by surprise, you won't have time to cast the latter. Likewise, you'll probably end up swimming enough to make a small investment worthwhile.

I've found that the three best uses for magic are combat buffs, utility effects that can't be replicated with skills (like flight, which is REALLY useful in some places), and in the case of UW2, repairing/enchanting your own items (since the repair skill is unreliable even when maxed out). Even playing as a mage, those are usually your best options; blasting your way through everything would be prohibitively mana-costly.