Kuroisan does not have the "invisibility detection by script" effect (look more closely using Near Infinity), so if he did happen to see through invisibility once for you, it's a game engine bug. Like so many Weimer enemies, he falls to invisibility.
Elemental damage (like his acid) bypasses Stoneskin -- that's one of the (many) reasons why the Flail of Ages is so powerful.
Too powerful for an early-game encounter? That's the point, so I'm glad it's working.
K is supposed to inspire you to avoid Celestial Fury until you have the power to deal with him.
Copies of powerful items? That was also the point. K was made at a time when the Kensai-Mage dual was all that anyone talked about on a.g.b-g. The subtext here is that although the kit and items are powerful, it's really the human intelligence that rules: you still end up defeating the big K, even though he has all of the "cheese".
HINTS-Kuroisan has more info.