It would have been better if stealth had worked.
I don't recall having any issues with stealth in IWD 2, but you rarely needed it anyways. That game was all about AOE debuffs and damage spells.
There are two parts that you want it:
1. At the stockade of Torak's village, where you need to sneak into the village to open the gate to the hostages to complete a sidequest.
2. In the caves below the Horde Fortress where you get bonus XP for sneaking past all three goblin tribes.
Do you
need it? Nope.
That said, I use native stealth for all sneaking. Never did have Invisibility prepared. It works
well enough for me to get all the bonus XP for sneaking.