The way I read the Heat Death ability, it's just 4d8 every round. It doesn't say that the target takes 4d8 damage each round, and an additional 4d8 stacking each round they fail the save. It says it takes 4d8 immediately this round, then additionally takes 4d8 the next round and so on and so forth as long as the pyro maintains concentration. I think you're right, and that it is a fairly useless power when the fire bolt does more.
I believe their thinking is that as long as the target fails the initial fort save, it will just keep taking damage without having to worry about making subsequent attack rolls like you would with the fire bolt. Of course, they probably don't take into account the fact that fire bolt is a ranged touch attack, and the attack rolls probably won't matter much by that point. In short, they wanted to nerf a save-or-die, but forgot to make it worth using afterward. It is now a Save-or-Ouch-that-kind-of-stings.