Can you tell more about potions? How essential they are?
I'm not sure I can really tell you how essential they are. So far, I've needed potions (particularly Blizzard, which slows everything down) for four or so fights - there are probably some others where they could have been handy. I found the swamp pretty hard, so I should probably have used some potions there.
Cat is essential for seeing in caves and crypts. Swallow is handy for regenerating vitality.
In general, you need to have the recipe (from a book or NPC), the basic skill, around 3-6 ingredients and a strong alcohol base. I usually need to buy the alcohol, because I find plenty of weak or medium alcohol but not much strong, which you require. I've found maybe 6-10 or so potions as loot, and a couple of those remain unidentified - you definitely make them yourself rather than just find them.
Potions build up "poison" and you need to meditate but I really haven't had any problem with this - I mostly only take one potion before meditating so far.
At the very beginning when you choose the difficulty, it says higher difficulty will require more reliance on alchemy.