If you plan on being successful with Alchemy at all. Well, in mid to late game, you have to grind. It's a grind skill.
Unless you actually set down and pump out the concoctions, you will never get the skill high enough to really do anything. That is if you want to make it a focused skill.
Not at all. As a matter of fact, unless you use the added buff of a full set of enchanted gear, you will be hard pressed to becoming... OP'd.
I think people worry too much about this whole OP nonsense anyway. Especially when you simply "specialize" a character and don't create weapons that do 1K damage.
Build up the skill, perk it out and have a blast.
Alchemy's strength is in its versatility. Make a variety of potions for a wide range of circumstances and purposes. Fortify Skill potions are obviously useful in all circumstances (combat + stealth). Resist magic + elemental are great against dragons and mages. And use the full range of poison effects to help out against strong enemies and crowd control larger groups of enemies---paralysis + slow are very useful.
Before 1.9 I would have said that the Experimenter perks are useless, because once you learn the effects, the perks offer no further benefit. With Legendary, you can get those perks back, but your potions will be much less powerful. It also depends on how much use you'll get out of putting those perks elsewhere.
As for building up the skill, it is a bit grindy. But there are a few recipes involving common ingredients that make quite valuable potions. I just stock up on these ingredients, and occasionally make a big batch of these potions. But I've never felt that increasing Alchemy was overly tedious.
I had a hunter type character that Alchemy was one of the main way's she made money. I never spammed potion makeing, exactly but it did cause her to lvl up at times. She only got to lvl 37 before I decided to start another character, so I'm not sure what would have happened to her at higher lvl's. She was very balanced for what she actually did. Bosmer, 1h ( not used much only ever had 2 bottom perks) Bow, light armor ( only wore fur) smithing, but only up to leather. Alchemy, perked pretty well. Bow and Alchemy had the most perks if I remember right, with a couple in speech.
Personally I wouldn't put any perk points into alchemy. I use Alchemy to make Paralyze poisons and Cure Disease potions. Paralyze for 5 seconds is plenty of time for one poison with no perk points in the skill.
I don't agree that you have to grind alchemy. My PC is currently a stealthy illusionist with no enchanting or smithing. Think about how that limits your weapons and armor. To compensate, she relies on potions (poison, fortify, restore etc.) for everything. If you remember to use potions extensively, you'll have to make potions extensively and you'll level. To be honest, I'm not sure you have to get higher than 80 in the Alchemy skill. That's all you need for Alchemist 5/5, Benefactor, and Poisoner. These cover all your practical uses.
My big compromise with alchemy was setting up a Hearthfire house with a fishery, garden, and greenhouse so there is a significant stockpile of ingredients. I'm not allowing any store-bought or freely-donated ingredients. All ingredients have to be foraged, grown at home, or stolen. There are players who only work with foraged ingredients.
I'm making a conjurer/alchemist at the moment. He'll use a bound bow to deliver poison and potion bombs added by the Throwing Weapons mod (damage increases with alchemy skill.) Conjured creatures will keep the enemy occupied. He's only level 6 at the moment so I can't say how well he will work on Master difficulty but he should be fine. I'm NOT going the sneak route, otherwise sneak attacks would be the focus rather than alchemy. Alchemy can be applied to the bound bow for those who did not know.
Some mod suggestions for an alchemy focused character:
Community Skill Uncapper
http://skyrim.nexusmods.com/mods/1175/?
Prosperous Alchemist
http://skyrim.nexusmods.com/mods/38634/?
Learn Alchemy from recipes
http://skyrim.nexusmods.com/mods/34795/?
Combine potions
http://skyrim.nexusmods.com/mods/15005/?
Field Alchemy
http://skyrim.nexusmods.com/mods/27153/?
Throwing Weapons Redux
http://skyrim.nexusmods.com/mods/36147/?
Farm Everywhere
http://skyrim.nexusmods.com/mods/25655/?
Big Book of Alchemy V2
http://skyrim.nexusmods.com/mods/29840/?