It seems many of the multiclass prestige classes suffer from this, and mystic theurge is no exception. Going from level 3 to level 8 your character ends up as a waste of space casting 2nd level spells, with lower BAB, lower hp, and much lower caster level.
From 8 to 16 you slowly start to catch up, but are always behind with one token useful ability that you only get at capstone, while forgoing bonus feats and class powers, and caster level. There exist some feats that can help repair the deficit but these feats become enormous opportunity costs compared with single class characters that invest their feats in actually making their characters more powerful.
Combine spells is nearly useless. Spell synthesis is great, but only weak as a capstone.
I'd like to suggest a couple of changes, most importantly to the entrance requirement:
To qualify to become a mystic theurge, a character must fulfill all the following criteria.
Skills: Knowledge (arcana) 3 ranks, Knowledge (religion) 3 ranks.
Spells: Able to cast 1st-level divine spells and 1st-level arcane spells.
Base Attack Bonus +2
So that mystic theurge is entered a full two levels earlier.
2nd level Theurgic Research: 3/4ths of the mystic theurge level is used for calculating class powers like channel energy, oracle's curse, domain powers, school powers, familiar benefits. This grants no new powers, spells, or abilities.
At levels 4, 6, 8 Theurgic discovery. Gain traits from the list: Magical knack, focused mind, and theoretical magician. Magical knack is taken once for either class to make up for loss of caster levels to enter theurge.
At level 5 add lesser spell synthesis, like spell synthesis except level 3 spells or lower with no dc or spell pen bonus.
Combined Spells: Get rid of extra spell level cost, max combined spells for slot swapping is the same as the bonus spells for spellcasting slot. A sorcerer/cleric mystic theurge with a cha of 20 and a wis of 18 would be able to use 2 sorcerer slots to fuel 1st level cleric spells and 1 cleric slot to fuel 1st level sorcerer spells.
At 16th level you have a cleric that has 2 8th level spells, a wizard that has 8th level spells, and a theurge that has 7th level spells. They all cast at 16th level, the theurge can cast more spells, but they're weaker. Once per day the theurge can combine spells.
What's better about this option is oracles and sorcerers can make use of the theurge class, and the leveling is less painful. Levels 3-4 are the only really awful ones. Sorcerer's and Oracles can avoid MAD but also lose more of their base class bonuses, as new bloodline powers/ mysteries won't be available while also suffering the extra 1 level penalty from spell progression.
The way this is set up theruge could be entered either 2/2 from any arcane/divine, or take 3/1 from divine/arcane. While 3/1 grants access to divine spells faster, this is slightly balanced by arcane spells being stronger and more versatile, though I can see an argument to restrict entry to only 2/2 splits for balance.
What do you guys think?