Here are my major complaints about fistfights. Please note I'm using a keyboard/mouse.
1) When I block (right mouse button) and get hit I lose 20-50% of my health. When I hit a NPC (even way below my level) they lose nothing or a very small amount of health when they block.
2) When the fighting starts it slowly fads in. Doesn't matter if I block or dodge (alt) I still get hit almost all the time.
3) The reach of the NPC's is way larger than mine. So I see them starting a strong attack. I launch a fast hit (left mouse button) but they are too far away. Yet their hit lands on me.
4) The key response is TOO SLOW. I mash a key and it takes way too long for that action to even happen.
5) Some of the fighters use fast attack only and unless you are lucky at the start by dodging away they get a combo and my health is down to 30-50%. I start hitting the dodge (ALT) key even before the fight starts but it seems the keystrokes are ignored till the fad-in is finished.
These are the main reason I hate fistfighting in TW3. Maybe they don't impact controller players.
looks like you have some input latency. do you use controller? with each - and reward for this quest was so crappy I almost cried when got it