Where is it written that it is used as a melee weapon and calculated using Melee, meaning you get to add Brawn? I don't read anywhere in my beta book that it is used as a Melee or Brawl weapon.
Burn for a base damage 5 weapon isn't that particularly staggering.
In regards to the rest it is a fusion cutter, so being able to cut things seems somewhat self evident.
So I should start by saying that, as with many other things, this discrepancy can totally be rectified by a sensible GM. You guys have posted some great ideas as to how to make this less ridiculous. My point was mainly that, as it stands under the unaltered rules, a fusion cutter is essentially the best melee weapon for its value in the game. Basically, everyone should have a fusion cutter as a backup melee weapon due to its incredible versatility for its cost (175 credits, which is less than a holdout blaster). Here is an example of why this is the case:
Take a PC with average brawn (2) fighting a stormtrooper. In one case they have a vibro-ax, in the other a fusion cutter.
The Stormtrooper has 5 WT and 5 soak. Pretty high soak for a minion, but normal WT.
If the PC gets a one-success hit on the stormtrooper with a vibro-ax they will deal 6 damage (2 brawn + 3 from weapon +1 from roll). The vibro-ax also has pierce 2, ignoring 2 soak. This brings the damage down 3, leaving the stormtrooper with 2 wounds. Not bad.
Now for the fusion cutter.
With one success the PC with the fusion cutter deals 6 damage (5 flat from weapon damage + 1 from roll). The fusion cutter has breach 1, and so ignores 10 soak. The stormtrooper is killed instantly by the spot-welder.
The PC would have to have a brawn of 4 to even match the damage of the fusion cutter. Of course, most enemies do not have 5 soak, so this is kind of an extreme example. But the fact remains that at average brawn, even against an enemy with 0 soak the fusion cutter will do equivalent damage with a vibro-ax (or force-pike, or most other decent melee weapons). And it's a quarter of the price.
That alone makes the fusion cutter a pretty good weapon, but then you have to factor in the full implications of Breach 1 and Burn 3. This means against high level NPCs, on a successful hit you are guaranteed 6 damage (unless they are wearing starfighter plating as armor). A vibro-ax on the other hand only needs soak 3 to suddenly be dealing reduced damage. That's some pretty nice added utility. But wait, there's also Burn 3. With only 2 advantage, you can cause an enemy to take a guaranteed 5 damage, plus either wasting an action to put out the fire, or 10 more damage over the next two turns. Given that even a Forsaken Jedi only has 16 WT, that means that with one successful hit of a fusion cutter and two advantage, you can do almost as much damage as a disruptor rifle, plus force them to spend a turn extinguishing the flames, or else be incapacitated on their next turn. Now a disruptor rifle costs 2,000 credits and is rarity 6. Far easier to get your hands on a fusion cutter (or two) I would say.
Because they are so effective against pretty much any type of enemy thanks to the combination of breach and burn, the lack of damage scaling doesn't really matter. It really almost makes them an essential item for low-brawn characters, since the damage is independent of your lack of strength. And high-brawn characters are much more likely to land the guaranteed damage and also activate burn (or sunder), so it really still has a lot of potential for them too. At encumbrance 1 it seems silly not to carry one around as insurance.
My ranting aside, it's not too difficult to homebrew ways to limit the effectiveness of fusion cutters, but because of their cost I think the rules would need to affect their use, not just have them potentially break with a bad roll. I welcome more ideas for how to curtail the use of the Dentist Drill of Death, but if anyone decides to play a character based around wielding one or more fusion cutters, I'd love to hear about that too.