1) Regarding the wall of fire, you are right. This happens quite rarely. And in general, the point of the ability is not in this. Sometimes, by moving a ranged unit stack closer to the enemy, you deprive them of the opportunity to attack. And that's pretty cool.
2) Actually, who forces you to attack them specifically? If these are enemy troops, you definitely won't see any exposed archers, and the ability will help you "expose" them. If they are neutral... Then you can reach these archers before their turn (there is a chance if the archers are new; if they are old, then almost always the bears go first), and therefore, kill a significant part of them. You can break them into 2 stacks in order to hit more stacks and possibly reduce losses. Even if they are pushed back, they will not cause colossal damage, because they are too vulnerable and many of them will die.
5) Let me explain, Liquid Flame is nothing more than a mini-fire wall, in your terms. It doesn't deal that much damage, but at the same time, the upgraded unit loses its lava shield and dragon's breath... And Helmar only has 3 of these dragons. That is, the damage from one such "mini-fire wall" is only about 30 units... I don't think this is significant at all.