1. There's no incentive to ever use more than 2 long range spells. Since a big part of the game is about researching new spells, that part is rendered ineffective as well. At this point, there's very little need to add more spells to the game, since people use a small fraction of what's available and have no incentive to do otherwise.
I disagree somewhat. I regularly use 2 LR spells (fireball and lighting) for general use, sometimes swapping them between buttons depending on the relative prevalence of monsters (fireball first in esper heavy areas, lighting first in robot heavy areas). I also keep Throw Rock within easy reach because a few monsters benefit from having a stronger attack, particularly an earth element (clockwork probes especially). I've also considered other spells and my choice of fireball was somewhat arbitrary over the newer light spell (energy orb?) I might use that one on the next continent just because I did enjoy it.
2. There's no incentive to use anything but long range spells, since anything else is more dangerous with minimal reward to compensate for that increased risk.
Again, I must disagree. I always keep Miasma Whip within easy reach, mostly for harvesting but having a potent melee attack helps a lot again kamikaze enemies like bats or spawned fairies that are either hard to hit or can sneak up on you. I also tried out Leaf Whip, and it works very well too but (echoing Chris' point) my enchants have veered towards mana reduction and cooldown, which means I can use miasma whip a whole lot, very quickly. My current character is also pretty low on mana, which makes heavy hitters like Leaf Whip unappealing.
3. Since all spells are competing for resources, there's no incentive to research anything but long range spells of a few kinds (or even just one kind).
No way, I almost always have extra resources around anyway because I take up missions to get one thing and get something extra or because I do side missions. Now, I do tend towards "spell families" like Light + Air + Fire because all use the same resources (Charred Embers and Magma, in this case) but even then there's limiting factors. A major reason I dropped the Light spells is because I need Coral to upgrade them, and the only ocean shallows is like 5 tiles away. Building a chain of buoys to get to it has been a continent-long endeavor. If anything, that supplies your "limited tiers per continent" idea to some degree. I just don't have access to needed materials, so entire spell branches are cut off for me.
4. There's only a minor incentive to use different elements. Having different effects to different elements (burning, blinding, knockback, wet + electricity = extra electrocution, etc) would go a long way towards alleviating that.
I do like that idea. See the game Magicka for a neat example of each element having a unique special effect but all elements coming in basically the same forms. I think more potent specials could bolster some of the less-used spells right now too. Like, I hardly use any blue (water) spells because they're weaker and the knockback effects aren't nearly potent enough to make up for it. It doesn't help that the vast majority of enemies are immune to knock back anyway.
5. Upgrading spells just leaves you with a stronger spell of the same type. The strength of the game is in having many different spells, but most people only need to upgrade their existing spells. Spending time upgrading the same spell is spending time doing something suboptimal and less interesting, because it doesn't expose the player to the gamut of spells the game offers.
Not really sure what to say about that. I somewhat like the challenge of racing to upgrade my primary spells each tier to compensate for stronger enemies, and usually enemy migrations encourage learning a new spell if the new enemy mix messes up my dynamic. I think additional enemies will help a lot with this aspect. Like if Clockwork Probes start showing up further afield, I may have to upgrade my rock throw more, or look into other green spells to get an edge on them.
I do think the enemy mix could use a boost in some areas though. Like right now, the Skelebot Junkyard is just very badly balanced. It's too easy to dominate with just lighting spells, and the rewards from raiding stashes in those little huts is far too great.
6. There's no mechanism to make each continent feel unique from a spell perspective or to try to push you towards other spell choices (AFAIK. I think there used to be some but they were dropped?). For a random game that's supposed to be infinite, it's critical (IMO) to force people into trying different spells so that they get different experiences as they progress in the game. That's why I think it would be so great to sometimes have fireball at tier 1 and sometimes at tier 5. Anyway, that's just one idea to improve the dynamics.
Again, I think the mix of which elements are easily available and which enemies are prominent in the areas you explore help to dictate which spells you focus on. I think as the enemy variety increases, this will improve. I also think somehow restricting access to materials even more might help. Perhaps if each tier required new resources, and those resources were only available in certain regions with specific criteria that could be rarer. Like "Tier 5 Fire spells require 'Skelebot Nuclear Cores' that can only be obtained by killing Skelebot bosses in stormy Junkyard areas." Or "This spell requires 'Cooled Lava' that can only be obtained in ocean shelves that border Lava Flats."