Being the player who used these spells...
There are a few more benefits to it:
People can't hide from me (no rogues sneaking up on this cleric!)
I can effectively protect my fallen/stunned/disabled allies (when I see them go down, I hustle over there and lay on the healing)
The Darkness obeys my whims (I cast it on a medallion around my neck--we ruled that it's a move-equivalent action to pop that necklace under my shirt, negating the darkness)
Part of this combination that was so effective was the use of the Fly spell. It raised my speed from 20 to 90, which allowed me to take the darkness wherever I wanted.
And it helps protect me against Dispel Magic. See, I was severely buffed for this battle. If the enemy had been able to target
me with a Dispel, I'd be screwed. But in this scenario, they would have had to do Dispel either the area, or the Darkness spell. Either way, my buffing spells stay up.
Not to mention that the Darkness effectively Blinds my enemies. I get the +2 bonus to hit, they lose their Dex bonus against me, they can only move at half-speed, all their targets get total concealment, etc.
Just imagine how awful this combination would be if we had a rogue in the party...
As to your suggested nerfs...
I think it would be reasonable to say that it does work like sonar. People can hide from it by ducking behind obstructions (maybe I'd get some kind of circumstance bonus to my spot checks). Silence negates it. It can't see through walls.
1) Blindsight is fooled by illusion magic
2) The vision granted by Blindsight is blocked by magical darkness.
3) The vision granted by blindsight is blocked by opaque objects.
4) Blindsight's duration is reduced to 1 minute/level.
Any one of these would be a pretty darn big nerf. A combination of them might make the spell nigh unto useless. If I can't see invisible people, and I can't see through a simple Darkness spell...then what've I got? A Darkvision that can see through Obscuring Mist, and allows me to succeed at Spot and Listen checks.
Another potential nerf that might be kinda cool: Keep the spell as it is, except that it blinds the caster beyond 30' for the duration. That would severely limit its use, especially in battles like that last one (where we were fighting on a large, open battlefield, with lots of moving around).