The bastard obsidian is the strongest sword in chapter 3, bar souldrinker which isn´t that easily acquired and titan sword which you acquire at the very end of the chapter.
In chapter 4, the only sword stronger than obsidian two-hander is Titanwing and that one isn¨t that easy to find, plus you may stumble upon it late into the chapter, depending on your progress.
Unless I´ve missed something, at least for the first playthrough obsidian swords are indeed useful.
However, I definitely agree that the gear variety in Risen is somewhat lacking.
Leather helmet ftw.