Yeah. This fight and the underground cult hideout which has a bigger population than apparently the entirety of the realm point out the logical absurdities of the genre’s “strategic” mechanics.
I beat this fight on account of Cypher’s being OP as shit on release I think, that was around level 4. I did it with a Chanter without too much difficulty at level 6 though, I think that’s sort of the sweet spot for that area, but I agree with earlier posters that game design which doesn’t telegraph the need for higher levels well in advance is dumb and disrespectful of a player’s time.
My one piece of strategic advice in really tough fights is that you just need to pause it more than you think you do. Once you understand the system’s lore specific mechanics (damage type, engage etc) the only thing that causes problems is being able to comprehend what’s going on so that you can manage it appropriately. You can cheese quite a few fights that way by just constantly making sure Eder or Tank Equivalent gets inebriated on consumables thereby tying up a bunch of enemies that you can eventually round on once you’ve finished off the rest.
Honestly, I think it’s a really stupid system. It’s quite fun at the start when you’re learning the ropes and you have to work around party limitations, but mid-late game it’s just a case of slaughter by numbers. Enemies don’t get more interesting or varied in their combat style and skills, or less predictable, they just get fatter and greater in numbers. The only strategy required is how to kill a bunch of things as fast as possible. And it’s a system which is exacerbated by the one aspect where the Roleplaying aspect is lacking in comparison to previous Obsidian/Black Isle games, namely that it seems very hard to progress without constant murder. It’s the same with the faction choice aspect, it’s like they just expected people to know when it happens because it’s a genre trope, rather than considering whether it’s one fit for purpose.
The actual experience of playing the story is first class though. Not least because it’s the area where they break the most with tradition.