No, for exactly the reason you say so. As for the why, I really truly do not know. Paralyzed is at least as strong as "bound", with way less squirming. Maybe there's a class or feat or something they didn't want to step on the toes of? Maybe it's just for balance since I noticed it specifically excludes Sleep, Slumber hex, and Hold Person.
It's decent, powerful might be a bit of a stretch. Without pinned the only thing it does is let you make a coup de grace faster in very specific circumstances (not the easy spell ones) as long as you use a (generally) weaker weapon (no two-handed). It still provokes, you still need to (essentially) have them at your mercy, all the feat changes is giving you your move action.
The pinned part makes it great for a grappler but it's still a two-round affair at best (first round initiate grapple, second round Greater Grapple pin, Throat Slicer). Oh, and you need Greater Grapple. I've gotten it down to one round but it requires like four feats (one of which is a style) and the opponent needs to attack and miss you first. It's a solid way for a Tetori or other grappler to kill people but they could basically already do that, just slower. Grapple, pin, maintain for damage until they stop kicking. Someone who's done a proper grappler could probably give you better numbers on it. I suppose you could also have a grappler in the party doing all of that while someone else does the killing with Throat Slicer but then it's definitely not worth it (too many actions burned).
Short version, yes it works like you think, yes that is weird, no it's not very powerful. Heck, it's only really useful if you're a grappler. Maybe useful if you have a grappler in the party, but probably not.
