1. That's where you need to know what you're doing with the battle system. Battles like the Spider Steinford house, the Erosian last stand and even those damn nightmares can be beaten if you know to use Vhala's defensive rain and fight defensively.
2. Battles are well optimized to current party level. The only ones you'd have trouble with are select battles that require specific conditions to beat but one look at the walkthrough can help with that.
3. Equipment helps but it will be your character skills that will kill and dominate an enemy late game.
The Erosian last stand is "
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" of this game and I always take delight when someone complains about it here.