Considering for how long men were fighting in melee and with bows/javelins in our real world I do not find it that bad. Sure, some advancement could be there, but why would it, if there is magic around?
And why not? In the world of PoE firearms became sort of mage-killers.
On the current topic: Obsidian could use a different age in the same world of PoE, advancing it for 200 - 300 years, perhaps? What could we see then? I believe that would be sort of steampunk setting with magic which actually sounds cool to me. It's always interesting to see how magic could affect the technological advancement throughout the history. I would have definitely backed such idea.
"Skyrim" is a bad example of what open-world RPG should look like. New Vegas and even Storm of Zehir are far better examples. Episodic content? No way.