Let me preface this by saying PoE, and games like it, will almost always be more fun to me on a personal level if they utilized a turn-based, Temple of Elemental Evil type combat system.
That said, I've often felt that real-time with pause offers higher "highs" such as pausing, formulating a strategy, setting said strategy in motion, and then unpausing the game and watching it all come together. That stuff can feel just incredibly satisfying when it works like you planned.
Unfortunately, there are also greater dips in "fun" as well, such as what you are talking about when it feels like a blast of special effects just went off, two of your guys are down, and the enemies aren't even hurt. WTF? What happened there? Also, one pet peeve of mine, is when I want to watch and savor a cool ability in action but don't have time to do it - I love all the little passive and active abilities ALL the classes can learn, and it's really fun when things like Rogue backstabbing works, and seeing in the log all the great details that derived the damage from something, but it's impossible to watch and enjoy ALL your characters abilities just because so many actors are on the screen.
Now, I tend to find playing on Normal and Hard that I can generally get more of those highs than the lows, but not always. One thing I to do is auto-slow combat speed down so I can better absorb what's happening. In fact, I'd love an option to go even MORE slowly if I could! I also have auto-pause set to when enemies appear, which presents its own set of problems because that's NOT when combat starts, so many abilities aren't ready to roll yet. But having it set to "when combat starts" is either annoying immediately after when enemies are spotted OR not early enough when you don't want to be detected (but don't want to run around everywhere in double-speed while in stealth). So I stick with "when enemies appear" and pause the game again as needed after that.
I have auto-pause set only to when a character is low on health, and I have everyone set to be aggressive and take on any targets of opportunity, but no one save me uses per-rest abilities/spells because to me that's the only bit of micro (auto attacking nearby enemies) that I needed before. In big fights I found the AI using spells and abilities to actually compound the issue of not knowing what was going on - because all the crazy shit going on wasn't even me picking it! That alone might be of help in answering your question, Rob?
I do love PoE, I like it more than Baldur's Gate (and as much as Baldur's Gate 2), but I actually had the same issues with combat in those venerable classics, too. I like the RPG system/mechanics enough and get enough of those "highs" that the net result is hours of awesome moments whenever I sit down to play, though.