They are not just observations. Red Truth is 100% true, Blue Truth is a possibility.

The Red Key is made of Red Truth, yes. It is at its basis a sharp, supernatural weapon. It is also a conceptual weapon embodying Red Truth. Just like the absolute truth, within the confines of the Umineko universe it is inescapable, it cannot be stopped or blocked or dodged, it will always unquestionably hit, because Red Truth is absolute truth. This extends to concepts, it outright destroys you on a conceptual level. She can also do things like destroy the distance between herself and a target with the Red Key.

... Outside of the Umineko universe my excuse for the nerfs is that things true in the Umineko universe are not necessarily true elsewhere. So the Red Key's concept-destruction is very limited and it can be dodged, and blocked by powerful enough weaponry. You can't just timestop or teleport though, she'll catch you like that. But dodging works and so does blocking with a powerful enough weapon.

After all, un-nerfed Dlanor would basically be unplayable. ^^; Waaaaay overpowered.