Regarding the inventory, yes it tends to get incredibly bloated, especially when you don’t know what you might need for later. There’s actually not that much you need to carry around and anything you think you might need later can be sent to your stash on the Lady Vengeance (that stash is even worse to try and find stuff in though). Alchemy and crafting materials can be mostly ignored (potions can be very useful but beyond health pots and specific resistances it’s not that important). As long as you’re not carrying the world around with you the categories and sorting work pretty well, but yes there’s a bit too much fiddling around with the inventory and it’s something you have to keep on top of so it doesn’t get out of hand.
You don’t even need to pick up a lot of stuff to sell. As long as you don’t mind stealing you can completely break the economy by pumping Thievery on one character (save any gear with Thievery on it, it increases the amount your can steal exponentially) and emptying out the inventories of vendors. If needed you can repeat this with multiple characters once their inventories reset.
When it comes to the combat difficulty, the biggest thing you can do is try to keep your gear at or close to your own level. Since gear is mostly random that sadly means visiting the vendors and hoping for the best. Their inventories reset every time you level up and (I think) once per hour.
Gear gains roughly 20-25% armour per level IIRC, which quickly becomes huge, and weapon damage and main stats (skill increases, Finesse, Strength, etc.) increase at a similar pace, so both defenses and damage scale exponentially with equipment level.
In combat there’s nothing more powerful than depriving enemies of their turns before they can do it to you. That means focused damage to get through armour and apply control effects (or just killing them if you can) is always the most efficient tactic It also means your armour and armour restoration skills (prevents death and makes you immune to CC) is much more important than health and healing (prevents death but doesn’t stop you losing turns).
If you can get rid of magical armour, mind control effects (Dominate Mind, Love Grenades, Charm Arrows, Mind Maggot Grenades) are extremely powerful as they take turns from the enemy and essentially give them to you. If you’re more physical focused there’s a ludicrous number of stun effects you can apply.
Lastly if you’re struggling with specific fights, in Act 2 there’s a pipe in the Undertavern in Drifwood where you can get some very long lasting powerful buffs. There’s a similar and even more powerful mechanic with tea in the last act (Arx), that can trivialise some of the hardest encounters.
Yeah I’d agree with most of that. They rebalanced armour in the EE, so at least you’re not super punished for splitting your party’s damage between physical/magic, but the fundamental problems are still there.