However much I agree with most of this, I feel that the battle system, although technically should have been brilliant, had a few leittle things that sort of ruined the game for me. For one, as you mentioned, the battles are few and far between and times, and to make this sensible they made them longer than necessary. I would have preffered more short battles (but I suppose that that's personal preference).
I also thought that the experience system was a big let down, and conversly made it difficult to get back up to level as you could only get a maximum of 1 level per battle, so fighting harder monsters was actually qute pointless past a certain point. Also, I like to be able to train, and the experience system completly prevented this as once you got to the required level for an area, you basically couldn't advance beyond this, making me feel that levels were actually quite pointless (you clearly disagree). As I consider training to be an integral part of any RPG, this kind of ruined the feel, as even if I wanted to, I could not gain levels (and the lack of battles made this even worse).
As a result, I'm left feeling that this should be (and maybe is) a masterpiece, but one that leaves me with no will to play it :(