You throw it in a direction, and wherever it lands it spreads exactly equally in all directions rather than mostly in the direction it was thrown as if dropped exactly from above (try that with a water balloon - throw it 50 times in a row, and remember it has to do that every single time with no chance for the liquid to not go in all directions roughly equally)?
It burns through even the most powerful magical powerful full plate mail or even +5 non-metal armor, diamond armor, and even magical force fields, and strikes even the smallest fastest most dexterous thing in all the world (and this is ordinary burning oil too by the way)?
And this thing you have no issues at all with, in terms of believability?
Compare that to a warrior striking, however glancing a blow it might be, any one creature right next to them, no matter how fast or well protected.
To me, it is far less believable the splash weapon damage, than the warrior's damage. Both have issues with believability, but the splash weapon edges on preposterous given the way it works in ways the warrior cannot even challenge.
Why not try to find a better way to model splash damage then? It's been said over and over that folks are willing to buy the less than perfect conceit that an explosion or splash damage takes up an area of effect.
If your main issue is a simulationist one, then solve the simulation problem when it arises. But if I'm reading your point of view correctly it's that you agree more with pemertion's "fiat" gamist perspective, and are just arguing on simulationist grounds in order to convince the more simulationist minded that they're wrong on their own terms.
But most of us aren't so hard core sim-minded that we require our AoEs to be laser precise. I'm fine with an acid vial going off in a less than perfectly realistic manner, but I'm more inclined to fix that than I am to decide it changes my whole conception of design principles, and suddenly damage on a missed melee attack makes perfect sense.
It is true that for a water balloon to burst out evenly from a central point then you'd need to lob it with a pretty high arc and a degree of skill. Why not just say your AoE attack is more of a cone shaped burst from a point then? Personally, I'm starting to grow fond of my crit on a saving throw idea and may houserule that in to my games.