Right that just seems foolish to me (and certainly not optimal), why would I move the fighter/heavily engaged char when I could use some one better suited to the task of killing the problem?
Because it was a fucking made up example (note the use of eg.). If you want a real example, feel free to look up my IWD Let's Play.
Sure it's a made a up example but it still tells us something about your play style, which makes some sense in IE games because you were punished if you tried several of the alternative options.
It seems to me at least part of peoples dislike of engagement is because IE games programmed them to play a certain way (if your style of play resulted in circumstances with similarities to the hypothetical case above). People ran because there was no penalty for doing so while there are penalties against the other options:
A) Switch your fighters/melee to ranged weapons and kill the problem without moving, result -8 to ranged hit, +4 to enemy melee accuracy and depending on the version +4 to damage == Death!
B) Get one of your spell casters to do something == hit to interrupt spell, spell lost.
The other alternative was to play a tactically different manner which didn't need any one running around because your'd provided backup via some other means, but some people don't like playing that way.
I personally don't mind engagement, but I don't love it either. At the moment I find the most annoying thing in PoE is the balance rather than the mechanisms and playing through the backer beta I had plenty of fun with the combat (except for the odd 1 hit kill or one hit multi-kill from Adra beetles on PoD). And the 'fun' level was comparable to my most recent BG, BG2 and IWD play through.
So I see no reason to remove engagement from the game to make it 'better', however if you can't stand it I'm happy you've found a way to remove/disable it. For those who find engagement makes combat not fun well I find that a little odd, however happily for you Sensuki has a way to fix that, enjoy! And for those who enjoy engagement awesome I can see why you do and I'm happy enough to see it in the game.
Now can we move the attention to the things that really need fixing, Balance, buggy path finding (though it's not terrible now, it's adequate rather than good) and better/smarter enemy ability/spell use and targeting? Because at the moment the game is to easy except for the Adra beetles and Cean Gŵla + Specter pack.