Like putting paralyze in your dagger, and being casted when used. Why would anybody do that?You could simply cast paralyze, or use spellmaking.Or ami i missing something?

For a weapon you'd do cast on strike. For the rest you're overlooking a couple of things: it doesn't cost Magicka, and it has zero spellcasting time. Get a large shield with a large targeted absorb health enchantment for instance and you've just made a semi-automatic gun.

Actually, you can do a cast when used for weapons (Devil Katana/Tanto, for example: frost/fire shield and summon longsword/dagger).

The reason you would use a cast when used is the same as having any item cast on use: to get spell effects you otherwise couldn't cast (low magicka, low intelligence, not being skilled in a type of magic). So for a dagger with a paralyze when used, you can paralyze when you don't have skill in illusion or even if you don't have magicka at all. I prefer on-strike, but of course, that's only with certain spells.

Shield on strike would be a disaster...

Even with it being cast when used on a dagger, or any weapon for that matter, if it's longer than a couple seconds, it's helpful, with an instant start up time you can easily beat NPC casters to the punch to stop thier spells, and you can more accurately control the ammount of charges it has. Most people find this an inconvenience but I think it's simply a different way to play, also if you have little skill in the weapon type is become more reliable than trying to him them over and over while you keep missing and getting punished.

I generally ignore cast on use weapons, unless it's something usefull on light weapon, like the steel blade of heaven, which is levitate on a dagger. Otherwise it's only good on jewlery items, since they mostly weight .01, so haveing a lot of them don't weight you down.

It also keeps you out of strike range from you opponent. You'll get hit from your opponent when using cast on strike spells.

I almost always use Cast on Use for everything. Aside from some of the stuff already noted, there's one more important point... the item recharges its magicka but you do not. It is far better to use jewelry to cast spell effects than doing it out of your own magicka pool. Much more efficient.

By way of confession, my chars have never beaten Umbra in straight melee combat. But I've never been too interested either. I usually don't even look for him.
The Soul Trap when cast spell on the sword seems at best a waste of time and can be fatal when my char is surrounded by Skeleton Champions.
My chars make a lot of money selling soulgems and enchant an ordinary silver sword for Soul Trap when strikes and then change to a more powerful weapon for the real fight after the soul trap spell takes effect.