The problem is that it's just as effective as the other purchasable weapons, if not more so, for fewer loadout points. The only other weapon that can kill outright is the MS, which costs twice as many points, significantly more parts, and only does so on a headshot against an unarmored target.
But you're prone to every weapon in the game if within flamethrower range.
You're harder to see, find, retaliate against and avoid with the MS.
They should make the Flamethrower ammo more expensive......
Less ammo makes you think twice before running around with it as your primary weapon and more as a backup weapon