Thing is, I actually prefer this dungeon to the part of the game that follows, as many of the more annoying aspects of the game (like not being able to rest in town, and being interrupted when you're trying to do other things) don't actually start until you get out of the dungeon.

On the other hand, I don't like having to start in a dungeon in Arena and Daggerfall (though at least in Daggerfall you can skip the dungeon by, I believe, pressing Alt+F11 right away).

Firewine Dungeon (or something like that) in Baldurs Gate 1 was really annoying. and some of the Icewind Dale dungeons went on too long as well, dont remember the setups or names though.

I agree about the Oblivion dungeons. Nice designs but very repetitive and boring. Same for all the portal worlds, and basically same thing for Skyrim. Generally dislike when it feels procedurally generated or copy and pasted

Not really dungeons, but Dragon Age II had two or three areas for side quests (some mine and a warehouse or something like that) that kept repeating over and over again, i was completely bored with those.

That was my first thought, too. I stopped playing Arcanum completely bored and exhausted after slogging through a long, linear and featureless dungeon of straight halls with tedious, repetitive encounters only to discover that the NPC I was looking for at the end of the dungeon was not there due to some bug I possibly triggered by doing something wrong during patch installation. Of course the latter is a different issue, but the idea alone of having to waste any more time on repeating this dungeon was enough for me to never play Arcanum again (which is a shame, because I really liked other aspects of it).

I see your point about it being a bit of a hindrance to those who want to reply the game with a different party, but imo Irenicus' dungeon is very well-designed. It has great variety, with lots of interesting things to do beside combat and something for pretty much every character class to do. It's also a really good intro to the game plot-wise. Besides that, it's also fairly short and can be completed in a couple of hours if you know what you're doing.

Contrast that with KOTOR, where you are basically railroaded for some 12-15 hours before the game gives you any freedom at all to decide where to go and what to do.

Arcanum is on my to-play list and I've heard great things about it. I'm a bit put off though to hear that "the dungeons are bad", "the combat is bad" ... it sounds like some quite big aspects of the game are badly-implemented.

Darkmoore Castle in Might & Magic 6.
Those bleeping Eyes, constantly dispelling every buff, even through walls.

Thankfully, much of the dungeon can be skipped with invisibility and telekinesis.

Combat isn't bad. But too much of it is. But yeah, a few of the dungeons are terrible. Way too big with way too much crap BS like instadeath traps and monster swarms that the game really can't handle. 3/4 of it until you get to that point was a decent game.

The "Battlefields" in Beyond Divinity are absolutely horrible. The only purpose of them is to grind. The areas are huge and ultimately pointless with a couple of randomly generated quests. Each act has one and contains a bland overworld map with multiple merchants and 3 randomly generated maze-like dungeons containing nothing but enemies. But the truly terrible part is that for some reason, they're accessible from the story campaign. You ocasionally find a "Battlefield key" that opens one of the dungeons there. So say you are currently trying to desperately escape from a prison in the story, while you can freely at any time teleport into some random area to grind. To visit merchants or grind experience.

Not only does it greatly interrupt the story, but it is unfortunately almost necessary to at least occasionally visit them, because they're the only source of good merchants for selling, gear and levelling opportunities.

I played it a year ago for the first time, and I enjoyed it and think it's a game one should play, if one's interested in crpgs. But it's definitely a flawed gem. The setting and story and many quests are great, but other aspects like the combat and dungeon design range from mediocre to pretty bad.
It's also unbalanced. If you want an easy game without too much inconvenience I recommend playing a mage who spams the Harm spell in combat and learns teleportation (because the map is huge and travelling gets annoying otherwise).

EDIT: Here's my review for Arcanum from last year:
https://www.gog.com/forum/general/games_finished_in_2020/post772

The "Power Core" from Genforge 1 is was a pain in the ass. Your character and creations will take constant damage just by being in the area, and it will intensify the further you explore. There are other areas where the very air has a damaging effect, but at least they are smaller or can be shut down.

Is it any better in Mutagen?

I am interested in Mutagen, but I haven't played it yet.

I can't avoid to mention Inquisitor. It's a fantastic RPG in some regards, but many of its most important dungeons are a pain. You must go through them with huge, needlessly intricate areas full of very powerful monsters that sometimes respawn. This can take many hours, detracted from the actual fun - the investigative and world building parts.

The Black Mountain Clan Mines in Arcanum were clearly my first thought when I saw this topic too. What a slog that is, and so early in the game too, with weak characters and before the rest of it really catches you.
Can't say I have bad memories of the other dungeons though. Then again, not good ones either, they're just... there. As for combat, definitely use turn based, real time is unusable (except late in the game when facing weak enemies and characters can just wipe them quickly... and/or you have Raven and that bow with 20 speed and a huge supply of arrows you don't mind going through at an insane rate, as she'll be machine-gunning just about everything before it reaches you). But the thing about combat is that you need a character that can hit, and preferably quickly, since exp is granted per hit done by the PC. That's awful design. And another bad design choice is that companions have a fixed level when you find them, so you need to know exactly when to get there, because they only level when you do, so if you're above their level when they join, they'll always remain that many levels below. And then of course you have the "trademark" Troika bugs...
That's a game to play for the setting, world, atmosphere, a rare gem from those points of view, to some extent story as well, and the magic/tech mechanic.

Glad I'm not the only one that found some of Arcanum's dungeons grating. The absolute worst I encountered was that infernal sewer under the big city (forgot the name). Not because it was difficult. It was incredibly repetitive.