Sabriel, good first post.
In my opinion there's no design flaw with letting focused 9th level powers be more effective than a wish. Remember, wish's big advantage is flexibility*; it's the Swiss Army Knife of spells, because it can literally do
anything. The balance for that is the big honking xp cost.
That being said, I'm wondering if Steveroo is overstating the spell's effectiveness. This causes an enemy to suffer -4 to his will save only (not all saves), and only against the psion who manifested the power. The other party members are out of luck. It also doesnt list the foe's weaknesses; it generalizes the concept of exploiting weaknesses by creating a will and SR penalty. Whether the guy was abused as a child or he has a soft spot in his evil heart for baby unicorns, this spell lets the psion take advantage of holes in his mental defenses. I never have to enumerate what those are unless I want to (which I probably will.)
I also really like the feel of this power. It's cool for a player to feel like they have neat insight into a foe's weaknesses, and it makes the foe really want to gun for that PC. This drives greater tension in the game, and that makes things more exciting. I think I'll emphasize this by borrowing BenBen's idea; even if they fail their will save, the subject knows that
someone has him at a horrible disadvantage, and you can be sure that it's going to make him tremendously paranoid. I think of it a little bit like Aragorn threatening Sauron through the seeing stone, only anonymous.
Multiple augmentations are allowed, but you can never spend more pp than you have levels in the class. Thus, the PC in question can afford one +2pp augmentation right now, and can't afford another for about a year real time (another two levels.) He won't be able to do this quickly with no save OR resistance until 23rd level, and I have no problem with that at all. In one sense I'm lucky, though, because if it turns out to be a problem my players are really good about tweaking things on the fly.
I think this has ended up to be a good solid 9th lvl power, right in the middle of the pack. I'm sorry Steveroo doesn't like the feel, but I'm diggin' it.
* Note that we have house ruled wish and bend reality to not require an xp component when duplicating lower level spells, identical to miracle and putting wizards and clerics back on a more even keel.)