I played it several years ago on the PS3 and I share your opinion. I really enjoyed the game on the story/investigation level, moving around the stages, possessing bodies, finding the clues. But the combat was the worst. I think if they hadn't introduced it and left the game as a non-combat adventure, it would have been better.
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And that's the result of your publisher stepping into development... I think the studio would have done a much better job on their own.