Completely agree with the OP: Durlag's tower is ROUGH. But also great fun. Each level is different, the story is great, and I had a great time there (although I too died a lot).
That room with fire? Holy crap. But then I stuck both fire rings and so forth on the main character and tried to lure people in there. That seemed to work out okay, if I managed to keep running around in there without getting hit too often. The flames would actually heal me, but the others were not so lucky ;)
Very, very tough place overall, not least the last fight.
Never used a contingency either in BG or BG2, but I hear they're supposed to be good. I just preferred to have high-level skills instead and try to whack people with that. It was also less metagamey that way, as I didn't know what I would face anyway, so a pack of breach and various spells of that sort, plus the good damage dealers, was crucial.
BG2 is a different beast entirely though. As much as I loved BG1 and Durlag's Tower, the Tower in BG2 beats it hands down. One of the fights in there is arguably the toughest in the entire game, maybe even including final boss fights. Rarely felt so good after winning that fight, virtually completely empty of spells (and we had 3 spellcasters).