Is it OP? Situationally. But that's no different than quite a few classes. Sniper is OP if you can't get to it. Spy is OP if you're unaware and facing with your back toward it. Does this mean bad game design? No, because that's how these classes function. If you aren't aware of a sniper or spy, you die. The same can be said about pyro. Nobody complains about the >180 degree backstab area, nor do they complain about hit detection in the game being spotty; but if it has to do with a class meant to control close situations it's complaining territory.
Skill or No skill? If you play the class well, it's skill. Identifying areas that you will have a distinct advantage and enemies that are unaware of you and are predictable is a skill.
Is the Degreaser/Flaregun/Axtinguisher combo OP? Situationally it's a nigh-instakill. That's like saying a sniper with full charge is OP or a spy behind you is OP.
If you want to mention the one thing that actually frustrates players it's airblast, but that's probably a good design aspect. TF2 tends to be spam-heavy and pyro deters that.