... That being said, the game kinda reminds me of Mirror's Edge where I really tried to avoid combat when I could. ...
(Note: Only at the second boss so far, so not very deep in the game.)
I agree that combat just doesn't feel very smooth or interesting, and it's much better to avoid fighting whenever possible - at least initially. But you can't avoid fighting forever. Luckily, combat improved the further I got into the game as I began to mix fighting and possession in more interesting ways.
Initially I would possess a body and then play "normally" for as long as possible until being forced to jump into something else. But that didn't take advantage of the unique gameplay for Geist and led to a disappointingly "ordinary" FPS experience.
Over time I've gotten more used to jumping in and out of bodies to help with combat - first by scouting out an area to see what's ahead, and later taking advantage of inanimate objects (grenades, explosive boxes, gun turrets) during busy combat moments. Both the first and second bosses
I'm hoping the game will find more reasons to spend time in your incorporeal form as it continues, and place less and less focus on normal FPS action... so far it really hasn't lived up to it's potential, but has offered flashes of brilliance.