Well, at first glance, it certainly seems excessive... however (bear with me for a second)...
What do you really gain?
You get a much expanded spell list, and roughly double the number of spells per day, at the cost of (at a minimum) one level of spell power.
What does the expanded spell list and double spells give you?
It gives you flexibility, and the ability to keep casting after other casters are out of spells. But how valuable is that? Certainly, I've played spell casters who ran out of good spells, but most often, the group retreats at that point, and the Mystic Theurge would likely have to as well.
And never understimate the value of that extra level of spell. As a spellcaster, you hate to be throwing 5th level spells when you're buddy the regular mage is tossing 6th level stuff around.
I'm not sure it isn't outrageous, but I'm not sure it is, either.