I've taken a good long look at this spell. I'm currently playing an 8th level druid, so I have some vested self-interest here. I agree, the spell is very powerful. But let's take a look at some of the limitations.
First, Miasma requires a breathing target, with some kind of mouth and/or throat. This effectively eliminates undead, constructs, oozes, most plants, and most elementals.
Second, your survivability after being hit with Miasma is directly dependent upon your Spell Resistance or your Constitution. This limits its usefulness against animals, most of which are rather healthy. The same can be said of many giants. Against dragons, you're hit on both ends, usually SR and a decent CON. Heck, a newborn White Dragon even has a CON of 13. Miasma can still be used on all these categories of creatures, but it will probably be hit-or-miss.
This leaves us with humanoids, monstrous humanoids, vermin, fey, beasts, outsiders, and magical beasts (forgive me if I've missed someone). These categories are where I see the bulk of targets for Miasma coming from.
Of these categories, let's look at the situations where you want to spend one fourth level spell to eliminate one of these creatures. A seventh level druid should have plenty of other options to handle most of these creatures. Shillelagh is first level. Produce Flame is second. Greater Magic Fang and a good choice on Wild Shape is plenty icky for third level. Flame Strike, like Miasma, is fourth, but gives instant gratification, possibly over two or more targets.
So why even choose Miasma? Enemy spellcasters. Miasma looks like a response to the situation that druid's don't have access to the cheapest magic inhibiting spell that all other primary spell users get--silence. Miasma inhibits someone who you probably already intend to kill from casting most spells. As above, the druid has many other weapons available, most at lower levels and effective against more opponents, to kill threats quickly.
Also, don't cast this on someone you need info from later. Of course, you could use Miasma to wait for the target to pass out and then use Dispel Magic (IIRC it auto-dispells your own spells). A third and fourth level spell combo over several rounds isn't a very elegant way to take a prisoner.
Finally, let's not forget it's poison. This spell should see fairly limited use by good characters in the first place.