+dmg is not useless. Most people at 70 will have over 500 in +dmg gear. This would make the actual base dmg of blizzard laughable if it was say 50 + 500 every tick as in your example. Also, the damage done would be so great on DOT's it would be insane.
I would say +dmg is still good for blizzard and AOE grinding, even at what you would consider a much reduced amount of damage. Keep in mind however that not all spells get 100% of the plus dmg. I believe blizzard gets a low amount due to cast time (or channelled). Some people here are math wizard and have the calculations.
Laroche