Having played with these Dark Melee changes on the Test Server, I have mixed feelings. On one hand, I normally skip Touch of fear on my build, so making it into a damage power renews my interest in taking it. However, on the other hand, Touch of Fear as it is on the Test Server doesn't function very well in my opinion, hitting too few critters and taking too long to deliver out the full damage to them.
As it stands, the small radius of the power makes hitting more than a few (3-ish maybe?) of the critters surrounding me difficult, if not impossible;. The Damage over Time aspect makes the unhelpful in clearing the spawn (I feel as though I have to fall back on my single target attack chain to achieve this). And, the lack of the mez/debuff affecting all of the hit targets limits the power's utility.
I would be much happier with the power if it were either to have a larger radius or to be a PbAoE, thereby enabling the power to be reasonably able to affect the target cap's worth of critters. I would also prefer that the power and some upfront damage attached - similar to the changes that were made to Midnight's Grasp back on Live. And while I wish that the mez/debuff affected all of the hit targets, I can live with foregoing this for balance concerns.
Yet, if the point of the changes is (as other posters have suggested) to create some sort of stop-gap AoE damage power, then that is an unprecedented and unique design decision for this game. (I cannot think of any power being designed to be useful on during the leveling up process and to be respec'ed out of later on.*) But more importantly, I think that would be an unwise direction to go: it creates a tax on Dark Melee players for leveling up by making them have to respec at whatever level the new Touch of Fear loses its efficacy, or else forgo the power altogether. And, to me, that seems to run counter to the goal of making Dark Melee a more even set through this rework.