Right, the recast of Scathe is 2.5 seconds (and I believe all GCDs are, it was never lowered to 1.5 was it?), so it doesn't matter if it is instant, it takes the exact same amount of time to move from one Scathe to the next as one Blizzard to the next. Aside from movement, the other place it might be useful is when a mob is about to die and the front loaded damage might hit but the cast time might not (as in zerged fates) but as far as rotation it's still not going to be worth it.
That said, it's a very minimal difference, and the time you spend in Umbral cycle once you have Blizzard III is also minimal, but on a standing fight Blizzard will beat out Scathe in pure damage. If you're in a fight where you're moving a lot or randomly, a missed cast of Blizzard will be detrimental, so you may choose to use Scathe *just in case*. But if you know you can stand still, choose Blizzard.
It certainly seems that Scathe is faster than Blizzard I.
Also, I was wrong, Fire I is the only thing that will trigger a Fire III Firestarter.
And finally, I swapped Scathe for Lightning 2. It is quick, DOT (130 initial, ticks of 70 or 80 at lvl 50) and 5% chance on each tick to spawn a free Thunder 2 that stays available for a reasonable amount of time. And the DOT effects as the mob is slept. Not bad. I didnt give it much of a go last time, and the damage / speed ratio is better with Thunder II because the amount of time it takes to cast is much faster and the damage done is not too much less than Thunder III. I like it. I started throwing it into my rotation as the first inital spell cast after lethargy.