Psychic Hammer is close to useless. It does close to no damage, scales badly and has no synergies. It doesn't even give any synergistic effects to any other skills either. There is no way this skill will ever be useful past normal, and even before then it isn't of much use. In the early acts when it can provide decent damage, monsters are often relatively easy to kill simply by just hitting them, and there are other skills here that provide better damage and are better investments for higher levels there as well.
Despite it's uselessness in PvM it does have a few redeeming qualities for PvP.
It is good for very low lvl dueling (as in ironmans), though it is often not permitted due to its effectiveness.
It is also good for high level dueling for finishing off necros with one life (due to open wounds and/or venom) when their bone shield protects them from mind blast.