Still going!
Screw it.
Fire Bolt, a cantrip, does 1d10 damage on a hit and 2d10 damage on a crit. And can do 1d10 or 2d10 the next turn as well.
Only if you hit on the first turn which is a major disadvantage of the spell in the first place. And also only if the wizard's concentration hasn't been broken and the target hasn't moved behind cover or out of range, all three things being not only possible but highly likely in any combat.
Whut? Where are you getting these figures from? 60% chance to hit? AC is highly variable, and Poison Spray is 1d12 and is technically "auto hit" as well.
You are aware that only the initial damage is boosted by putting into a higher slot, right? Which makes it an even worse choice than using it in a 1st-level slot.
Short of the target being incredibly stupid, standing behind something or going up and whacking the wizard who is constantly streaming lighting at you isn't exactly Gnomish Clockwork Device.
"Hmm, what should I do? This constant stream of pain is coming from the wizard as a bright bolt of electricity. I know. I'll just stand here and continue to experience this pain as no doubt there is nothing I can do to stop it because I'm not smrt like a wizzard."
You are focusing on the DPR part of this and ignoring the playstyle part of this.
At 5th level, I'm a wizard. I don't care too much about a single spell slot. I do care if I have to lay down a bunch of repetitive boring (since level one) cantrips spells to help take out a lieutenant. I also don't want to cast more than 1 or 2 non-cantrip spells out of my repertoire to help take down a lieutenant. I'm stingy that way.
Is Witch Bolt a DPR king? Nope. There are spells that do more damage.
The neat thing about the spell is that it is auto-damage. I can fire and forget. I don't care if the lieutenant decides to ignore the 5th level Rogue who often does 18 to 28 points of damage in a single round to focus on my wizard who is doing a paltry 6.5 points. If he does decide to do that, great. He's making a tactical error and that spreads damage around the party. I'm ok if he OAs or disengages, just in order to get away from my spell. That's either good damage or good action economy as well.
All of the cantrips can do zero damage in a round. So can this spell in round one. But if the player makes a single D20 roll, he's in the zone with this spell. Do you know how boring it is to do NOTHING for multiple rounds in a fight, recasting the same old boring cantrips over and over and over again? Blah. This spell allows the wizard to contribute every single round in a fight and he does it in more than one way. Yup, the wizard is only doing 25% to 35% of the damage that the Rogue is doing. But, that's ok. It's better than doing 0% that someone who misses a lot does. The wizard does not have to be a striker.
In 4E vernacular, this is a minor control spell. It does damage every single round and encourages the enemy to either OA, or disengage, or ignore larger threats and attack the wizard. It has a very limited use. And yes, it does force the wizard in close where area effect attacks are the best defense against it. But I'm ok with that as a player. I'm ok with risking one for the team as opposed to playing the pussy wizard 100 feet away that never takes damage in the entire day. I'm ok with balancing out total party damage to the wizard as well as everyone else. Wizards can suck up an attack every once in a while. That's ok. People play them like porcelain dolls.
And this spell is a bit better for Sorcerers or someone with the Spell Sniper feat.
At the end of this fight, sure, the wizard did a bit less damage than if he had been casting other spells. But he did it using up very few spell slots and worse case, the NPC lasted for a single extra round. Best case, the PCs still wipe out the NPC and the NPC got the same number of turns (because instead of the first PC after the NPC's turn killing it, a few PCs after that killed it). That might result in the PCs using up a bit more healing resources, but then again compared to casting cantrips, typically it does not.
As for scaling, no the spell does not scale. It's on par with cantrips like Chill Touch and Ray of Frost at level 5 (100% * 6.5 damage vs. 75% (or less) * 9 damage), it's a bit weaker than Fire Bolt or Poison Spray. This also means that it's on par with Chill Touch and Ray of Frost at level 10 (assuming that most foes fought by then have better AC offsetting PC's extra to hit bonus).
Btw, a critical on a cantrip effectively raises it's to hit by one. For example, a 70% chance to hit with a cantrip means a 65% of doing x damage and a 5% chance of doing 2x damage, hence, it's the same as a 75% chance of doing x damage for DPR calculations.
And actually, you are correct about the DPR. I expect WotC to slightly modify the spell in an errata at some point (I expect them to make the latter round damage the same as the initial round damage so that it scales decently with spell level). But even without errata, I know that I'll enjoy using this spell all of the way to level 10. It's just fun and it removes that frustrating part of recasting the same old At Will cantrips over and over and over again and missing a lot.
The most boring thing about playing a low level wizard is cantrips. Playing second fiddle to the other PC's damage while waiting for that one round per encounter where you might throw out a non-cantrip spell. zzzzzzzz This spell alleviates that pain somewhat. Something that someone not playing a wizard might not understand. Btw, my wizard also sometimes fights two dagger style to alleviate that pain as well.
As for the metagaming part of this, how does the enemy know that the lightning of the spell does not go for 500 feet? Yes, the caster might have moved within 30 feet (I would often move to 20, 25 if the foe has reach) to cast the spell (he might not have had to move though), but that does not mean that the spell has a low range limit. A knowledgeable foe would know it, but many foes are not very knowledgeable. That is what I mean by metagaming. You as a player or DM KNOW that it is limited to 30 feet, nobody else should (shy of actual knowledge of the spell).
You don't like this spell because you focus solely on DPR. Fine. I totally get the entire 5E scare factor that enemies are a real threat, so offense is better than defense. But it's an ok spell for some of us that do not play your playstyle. There are some really powerful foes that I would not use this against (like a Dragon), but an Ogre? a Minotaur? A Salamander? Sure. I'm not the only PC fighting.
PS. Poison Spray while technically does not require an attack roll, still gets a save. It is not automatic.