Obviously the result of a Critical Failure is expected to be worse than a Failure. We know that if they suffer a Critical Failure, then they're confused for a full minute. If the target suffers a regular Failure, then they're confused for the first action on each of their turns for the next minute.
Since Critical Failures are supposed to be worse, lets look at what is the worse condition, and see if we can identify what the likely intent for the spell is.
Obviously, being confused for only your first action each turn 1/3 of your turn is less powerful than being confused for your whole turn, so we can safely say that the Critical Failure effect is more powerful here.
Being confused and it clearing after making a single save is less powerful than being confused and that confusion returning every turn for the next minute even if you save.
The difference in power in the second point is significantly greater than the difference in power from the first point, which would mean that a regular Failure is worse than a Critical Failure. Since we've already determined that this shouldn't be the case, it's likely that we've misinterpreted the second point.
I would pose that the likely scenario is that if you suffer a normal failure and are confused for your first action each turn, that a save against the confusion on a normal failure would end the effect entirely, rather than ending the effect for one turn, only for it to refresh immediately on the next turn.
In regards to your #2 possibility, yes if the target is damaged and succeeds on the flat check, the condition would end. However, you should be thinking about this ahead of time and adjust your tactics accordingly, by attacking before you cast the spell. That being said, combat is rarely a 1v1 scenario. You're more likely to be fighting a 4v4 combat, since you're expected to be with a party of adventurers, rather than by yourself, and you're expected to fight multiple similar-level enemies more often than fighting a single boss enemy, so you should also communicate with your team to avoid attacking that target while the spell is in effect.
As another note, some spells are just not good in some situations. If you come across a locked door, then Grease might be *some help, but it isn't going to be the most helpful spell you could cast, likewise in a 1v1 scenario you should be casting a different spell to de-buff your opponent.
Pathfinder (and D&D) is a very tactical games, and if you undermine your own tactics, than obviously the resources you use would seem basically useless.