Relm's problem with magic is that she never gets enough time to learn anything worthwhile in WOB because there's a stipulation against grinding. By the time you get her, she's only going to be available for Floating Continent. Enemies there give a good amount of points, but considering that the enemies are tough and you're only bringing three people in the first place, you'll likely want someone who can do things and isn't in the process of being babied into usability. you'd be far better off going with any variation Terra/Celes/Sabin/Edgar purely because they'll be useful and you can finish off some esper skills for them while still having a base to work with. for relm, it's all uphill.
as for the assassin's dagger problem, I don't see how having a weapon that can cause instant death is a bad thing. really, your best refute for that is that it's not causing instant death to everything? it's still a plus for locke, any way you cut it. as for the damage output with bosses, lolmagic. he's not doing the most magic damage, but it's really negligible considering he has some of the best availability in WOB for building skills, meaning he'll at least be able to do something helpful, whether it's casting Fira for some amount of damage or using an esper itself. this isn't even getting into the fact that if you really hate his damage output, you could just make him support with haste/cura/slow/etc., giving your main damage dealers less turns to waste buffing and supporting and more time to go offensive. Locke's not superb ultra awesome at damage output, but he's still doing a good enough amount with magic and it's not like every character needs to have amazing offensive output to be useful in the first place.
Sabin should still be below Edgar. Edgar's providing a utility early on with Crossbow that Sabin can't match for a while, and Edgar is just more useful for clearing out random encounters (Crossbow/Flash + Chainsaw + Bioblaster + that confuse casting thing), and his boss damage with Drill is something Sabin never gets a chance to match either.