I don't know what you're experiencing with the offline mode problem, I just know it works fine for me if I don't have a connection. Like I said, if I'm not logged into Steam and the internet goes down, Steam lets me start it up in offline mode without even putting in my login information. And this has been the case with every single game I have purchased through Steam.
The issue with Paradox, as you describe it, makes it sound like Paradox is the one you should be mad at. That method of patching games is highly unconventional and just doesn't work with the new direction distribution of games is taking. Again, this is the developer's fault, not Steam's.
Yes, the modding thing is a problem. There's no avoiding that fact, but like I said, the modders and the people who play them are a minority of the gaming community so it would make bad business sense to cater to the smaller portion of your customer base. This is especially true, if that catering means holding back new developments and innovations that make a dying industry come to life again. Because that's what going back to the old method of distribution would do to PC gaming, it would kill it.
The one advantage PC gaming has over console now, is the fact that it is easier to get the games and store them on your computer and take them with you anywhere you go if you have a laptop. Without that advantage, PC games, while they may be of higher quality, just won't be able to compete with their console counterparts. This was proven in those first few years when better consoles were coming out (PS2, Xbox, Gamecube) and there was no digital distribution. PC sales sagged every year during that time while console sales absolutely exploded. It got to the point where PC releases barely got a mention in any magazine that wasn't specifically dedicated to PC gaming. Once Steam came out and actually caught on with the masses, PC sales finally became comparable with console sales again, and developers, publishers, and the gaming media starting giving a damn about PC games again.
Digital distribution has brought PC gaming back from the brink of irrelevence, and to me that trumps any minor inconvienences that may exist with digital distribution.