Great rant, Steel Wind!
I do not like the magic system in ANY version of D&D, as it causes the problems you so well elaborated in your post. Even an apparently innocent spell like know alignment can really take the wind out of the DM's sails. I prefer Gamma World:
http://www.dragonsfoot.org/forums/viewtopic.php?t=12358
Right up front let me state that I HATE what seems to be the way the majority of people play Gamma World: wild and wacky. (Unfortunately, this style of play was supported to at least an extent in the published modules.) I don't like that, and I never have liked it. A post-apocalyptic campaign should be nothing if not serious.
That said, I don't think that the 1st edition Gamma World rulebook reads that way. The cardinal problem is that some of the rulebook's illustrations (though not all--such as the cool cover) are wacky (such as those damn rabbits with the rifles). Ignore those illustrations, forget about other peoples' wacky GW campaigns, and read the rulebook with fresh eyes. Its setting is dark and inhuman (with just a few discordant notes, such as the aforementioned rabbits), moreso than any other RPG I've ever seen.
Some considerations:
GW is bleaker IMO even than Call of Cthulhu. In both those games, mankind is eventually going to go extinct, but in GW the extinction has already started and is nearly complete. Instead of living on a planet with billions of humans on it (as in CoC), the humans of GW number probably only in the hundreds of thousands. You run the numbers, consider that high-tech artifacts are becoming scarcer by the day, and look at how the various mutants with human-level intelligence are all more powerful than the pure strain humans...
...and you're looking at human extinction. The Big Show is over. The Apocalypse has already struck, and it wasn't a mere WWIII. The very continents buckled. The very oceans boiled. All the nukes on earth couldn't do that. Mysterious forces and energies changed the very fabric of life on earth. Probably vertebrates as a whole (not just humans) didn't do too well. Now comes the age of the insect, the worm, the plant, the fungus, and all the hideousness of the microscopic world. The entire Gamma World is dominated by gloppy, tentacled, multi-legged, insectile, oozy, writhing, hideous abortions of life. At the most humans will be around for another 1,000 years (if they're lucky), and in that time their numbers will continually dwindle until the number reaches 0. And they are already well over 99% of the way there. GW simply allows you to adventure in the last choking gasp of humanity before the ultimate end.
In my experience, CoC characters last longer than do GW characters. Plus CoC characters live in a safe world. If they so chose, they could simply stay at home and listen to the radio. To get in real danger, CoC PCs typically have to go looking for it in obscure corners of the world. Contrast that with GW, in which there is no safety or comfort anywhere. The best you can hope for is to find yourself in a place relatively less dangerous than others. The whole freakin' planet is a danger zone.
In CoC there are happy families all over the world with little children playing safely in the yard. People go to movies, eat out, take vacations, and enjoy life. There's none of that in GW. That sort of thing is over. Civilization is gone. All that is left is a planet-wide mutated and insane wilderness, with a few small bands of endangered humans here and there.
I think that the tribe of natives in Jackson's King Kong perfectly illustrates what the typical human enclave would be in Gamma World. These guys are seriously messed-up from living in the shadow of vastly more powerful monsters.
Also, get some good recent science books (with lots and lots of color photos) about insects and microscopic life. That stuff is more horrific and even Lovecraftian that Lovecraft's best work. Now imagine the real-world insects and microscopic organisms horribly mutated and much LARGER, and some with a high (though inhuman) intelligence. As much as I love Lovecraft's extraterrestrials in
At the Mountains of Madness and "The Shadow out of Time" (which I regard as clearly Lovecraft's two finest works), they aren't as scary as the GW versions of real-life creepy-crawly stuff.
Also, I do not think it would be possible for humans to rebuild their civilization in GW. They've been shunted back into the Stone Age. They'd have to start all over again by learning to farm...er, maybe not, since the flora bites back. And they'd have to learn to domesticate animals...um, ah, the animals are now trying to domesticate humans. It's a non-starter. With no farming, none of the rest of technical civilization follows. Small groups for short amounts of time could carve out little enclaves of high-technology. But who do they call when their computer crashes? Now their robot-control network doesn't work (resulting in wild and/or uncontrolled and/or defunct robots), and all they have are a few hand-held weapons with, oh, 47 charges total. What happens after firing that 47th charge? Meanwhile, the mutants can fire those eyebeams from now until the cows come home. Plus those mutants are making little mutants. Nobody's making new high-tech items. Inhuman mutated insects and mutated microbes inherit the earth.
In short, I think that a 1st edition GW campaign can be darker and more serious than any other type of campaign.