One of the simplest ways to explain the balance of Dualistic is by looking at its value at low levels and high levels.
Syonique on the DSP forums gives us an excellent breakdown of the cost of dualistic, showing that Dualistic is not worth the money until you hit +3 weapons. Another way of thinking of it would be that a +4 (+3 dualistic) weapon is cheaper than two +3 weapons. However, the dualistic weapon-user is always going to be +1 behind the two-handed weapon user. When the Fighter (or Warlord, or what have you) gets his +4 weapon, the dualistic TWF user has two +3 weapons at the same cost.
This balancing factor is most apparent at max level. The dualistic weapon user is trading the raw power of two +10 weapons for (essentially) two cost-efficient +9 weapons.
Think about if that +1 was just a flaming quality. That's +1d6 damage on hit, but a TWF thrives on multiple hits. With a +16 BAB and Greater TWF, that's 7 hits. With a haste-effect, that's 8 hits, or an average of 28 damage lost on a full attack. Some TWF players are willing to take that power hit for more flexibility in their item builds; players who value raw power will prefer shelling out the cost of an additional +10 weapon.
Just to repeat: There is a real cost of dualistic, and there is a real reason not to take it. You're trading flexibility in your item build for raw power.