Well, in this instance it's a racial ability that, in and of itself, isn't especially potent. It'd be useful, but certainly not mind blowingly powerful.
What you're talking about is a combination of how some races/classes can be powerful, but that doesn't make the race itself especially crazy powerful, does it?
Essentially the class gains access to a 0 level spell a set number of times per day, and it can convert that spell into equivalent level spells of a set number of schools. Mind you again, this is a zero level spell.
I mean, it's not as crazy as entirely negating the full on maximized breath weapon of an epic level force dragon or anything. =)