It's not really a problem. Creatures' attack bonusses grow relative to an unmaximized AC. A maximized AC can stay level with or ahead of the attack bonusses.
Examples of this:
Wizard 14 dex, mage armor, shield, protection from evil, cat's grace, haste
Lvl 1 AC 16 or 19 (mage armor or shield)
Lvl 3 AC 17 to 25 (mage armor and cat's grace--sometimes add shield)
lvl 5 AC 21 to 28 (mage armor, haste and cat's grace, sometimes add shield)
lvl 7 AC up to 35 if the mage wants to polymorph himself into a troll.
Fighter 13 dex, dodge
Lvl 1 AC 18/19 (chain mail, shield)
Lvl 2 AC 19/20 (banded mail, shield)
Lvl 3 AC 21/22 (fullplate, shield)
Lvl 4 AC 22/23 (+1 fullplate, shield)
Lvl 5 AC 26/27 (+1 fullplate, shield, haste spell from wizard)
With expertise, this can reach AC 32
Both of these characters are relatively focussed on defense and have quite good ACs--particularly if the wizard or cleric buff the fighter as is seen in the last example. A typical troll (attack bonus +9) will have a lot of trouble hitting the 5th level fighter once the wizard casts haste on him.
Certain classes have trouble achieving good armor classes (barbarians and druids have difficulty) but usually, a defensively focussed character is more than capable of being quite difficult to hit.
For a high level example:
Fighter 13 dex.
+5 fullplate, +5 large shield, +3 ring of deflection, +3 amulet of natural armor= AC 37
Make it +5 mithril fullplate and give him gloves of dexterity of cat's grace and that's AC 39.
Cast Mass Haste and his AC is 43. Even the CR 18 and 20 creatures can't count on hitting him without a decent roll.
Your contention relies on AC buffing measures still allowing creatures to hit on less than a 10 or so because as soon as creatures need to roll a 16 to hit, blur only reduces the chance to be hit by 5%--which is hardly worth casting a spell for. Even if it is done before combat, an endurance or false life spell would make a much bigger difference at that point in the game.
The same is true, however, in the best case scenario for the spell. If the opponent could hit on a roll of -35 and consequently only misses on a 1 no matter what you do the character's AC, a 20% miss chance isn't going to help much. An 81% chance of taking damage is very similar to a 95% chance of taking damage--either way, the character will probably be hurt. In that situation, something that reduces the number of rounds for which the enemy attacks by reducing his hit points--Acid Arrow for instance--or something that gives the character more hit points so he can take more hits--endurance or false life for instance--will most likely be more effective than a 20% miss chance.
I'm not saying that a 20% miss chance isn't nice to have. Considering that the opportunity cost is a more useful second level spell--or even a first level spell--however, I don't think it's a good idea to cast blur in many situations. . . and there aren't enough situations where it is a good idea for it to be worth preparing.
If a spell is almost never worth preparing, it's probably not worth knowing. Buy a scroll, put it in Heward's Handy Haversack and if you ever have a round with nothing better to do--and something needs to be done--cast it. I'd bet that situation won't ever come up though.
As I said, I don't think blur would be impressive for a first level spell. My Living Greyhawk fighter/wizard probably wouldn't prepare it, even if it were in his spellbook and it were first level. There are too many better ways to spend a standard action (shield, dispel magic, haste, blink, glitterdust, magic missile, attack, etc)
Stalker0 said:
The main problem with this argument is as you get higher up in levels, usually teh attack bonus of an enemy tends to grow much faster than AC.
So in your scenario of needing a 2 to hit, the miss chance of 20% reduces a monster's 95% chance to hit to 76%, a 19% reduction. If the creature needed a 4 to hit (a +2 to AC) that would reduce it from 95% to 85%, a 10% reduction. But's that IF the +2 to AC actually required the creature to get a 4 or better. If his attack bonus is very high, even with an increase of +2 to AC, he may still hit on a 2 or better.
The other thing is that miss chances stack much better than many bonuses to AC. After a while, you may have plenty of AC bonuses from equipment and spells, and then slapping on a miss chance makes it even better.
I'm not saying that protection from evil and shield aren't great spells, and often should be cast first. But for an extra layer of protection blur can be nice.