The third engineer is kind of the idea behind it, and ships that are going to be tanking more than other ships are exactly what the torch is designed for. It's built to be semi-situational on ships like the Galleon, the Pyra, and possibly the Goldie. The idea being that, on ships that don't need everyone on the guns all of the time, or don't need as many people on guns at the time being, the Torch would be a useful tool to slow the damage of incoming before a large repair is needed. Think of it more like tying a bandage rather than cauterizing the wound.
Part of the reasoning for it is simply to slow the damage, rather than stop it entirely. The slow repair speed makes it weak in comparison to the other tools for mass repair, but strong in trying to keep a component from falling under light to medium fire. It isn't supposed to fully take the job of any of the other tools, and is instead supposed to supplement them.
And to answer your last two questions, if a component is hit with any repair tools while it's being torched, it's put on the same cooldown just like normal. The idea of it is to slow the intake of damage until the regular tool can come and deal the larger repair, without putting it on any sort of cooldown. That way, in the event of catastrophic damage to another component, you could simply call to your team that, say, the hull needs a malleting, you can run off and start work on rebuilding an engine while your teammate mallets the hull. Or else the captain wrench's the hull on a Pyra.
