Just last session, I had a player that wanted to grab Acererak's staff and take it from him. The character did not have any abilities to disarm, so I said no. Because while it'd be pretty cool if the character had pulled that off, it would've opened a whole new can of worms. What happens when Acererak starts targeting everyone else's weapons in turn, leaving people completely helpless? What happens in future campaigns, when a band of goblins with high dice rolls can completely divest a party of everything they're holding and run off into the woods, never to be seen again?
Likewise, what happens if the DM rules that an NPC or monster using a similar effect to Terrifying Visage rules that the PCs all flee in terror automatically?
Well, since you asked...
That would be pretty awesome to see a lich wading its way through
fools an adventuring party, systematically grabbing their weapons from their hands, and tossing those weapons out of reach and in all directions to scatter the party.
If a player told me "I take Acererak's staff," I'd say "make a Dexterity check." If it were a nat 20, I'd give it to him. Otherwise, I'd say, "you grab the butt end while Acererak swings the staff. The lich gives you a soul-stealing look, and you think something bad is about to happen."
Re: the goblins, trying to grab someone's weapon is a good way to be attacked by that weapon. I would usually run it (not in D&D) in two phases: 1) the goblin (weapon-grabber) takes damage if the PC has an action to attack with, but the grabbing action then adds a penalty to further attacks with the grabbed weapon, 2) a second action would remove the weapon from the PC's hands, but this would require a favorable roll on the goblin's part against the PC. Otherwise the two remain tangled.
Does this result in hordes of weapon-stealing goblins? Only if the GM runs goblins that don't mind taking damage. Also, a PC isn't worth her salt if she goes adventuring without a secondary weapon.
Re: the automatic Visage, it could be a game-breaker. Not sure how multi-planar Intimidation breaks the game, but I bet PF2 codified some useful stuff, at least into the crits. But the main question was "why does such a crappy spell sound so cool?" (To paraphrase.) And there are tons of answers. My current favorite:
The result of the intimidate check reflects the opacity of the spell. Roll a Fail or Crit Fail, and the spell is so transparent that it's no more intimidating than a bad dream.