Narcomoeba is a may ability as well, so this basically just cuts Dredge off for a turn. You can just decide to not resolve Narco, Ghast, and Ichorid.
Realistically, you'd want to pop this guy in response to a Dread Return, but that would mean you'd need to have it already in play (telegraphing hard what you want to do) or find a way to get it in at instant speed (without flash inherent to the card this is much harder).
I don't know that this is terribly bad personally. Card only works for one turn. Sure, that single turn might be all they need, but it's not like Containment Priest that can just blow you out.
Excellent points I didn't immediately think about. I don't think it's terribly bad though. It still slows down Dredge and Oath (not stops them), which may be enough time. Having a sideboard option when you're not in white that can hit both isn't a bad thing. Still stronger to probably run Grafdigger's cage for that role most likely. But being a creature isn't nothing (but also a detriment).