Ok so Swains ult in the first place is a pretty dang OP ult in team fights
Overpowered is a matter of having greater strength relative to the alternatives, not something that's just useful in a given situation.
Pretty much every mage ult is extreemly powerful in a team fight.

.
You're generally looking at a large-scale burst of AoE power, often with a smattering of AoE CC thrown into the mix. Hit all 5 enemies with it? You're probably going to win a team-fight.
Swain's ultimate is not OP in this regard.
His ultimate actually has 3 drawbacks compared to the ult of, say, 
- 1: Damage is delt over a lengthy duration rather than front-loaded in a single instant. This makes it easier to respond to and deal with Swain's ult damage.
- 2: Swain's ultimate doesn't apply CC. This isn't huge, but other ults do: making it less impressive by comparison.
- 3: Swain's ultimate places him in close range to his opponents.
3 is a substantial weaknes - especially when you consider mages by and large tend to have the greatest range of any champion type.
Sure - he heals pretty fast when he's in close range ulting people, but champions like Lux, Ziggs, and Xerath? Aren't even taking any damage at all to get their ultimates to deal damage, leaving them in no danger at all. Champions like Annie, Lissandra, and Syndra don't have the same range - but only need to expose themselves to medium-ranged assaults for an instant when using theirs.
but what is worse is that it can be combined with Zhonyas Hourglass. I'm not sure if this is a bug or if it's on purpose
Swain leans towards a play style that's essentially jumping into the middle of 5 enemy champions as someone that isn't a tank.
Where other mages just nuke everyone from a safe distance.
Hourglass's interaction with Swain isn't broken, especially seeing as you can just evade his ultimate by listing lazily to the left, quite easily, when he immobilizes himself.
Also - Hourglass's active has been around before LoL went live in Zhonya's Ring, and Zhonya's Hourglass is a recommended item for
.
Riot is well aware of what it does. Hourglass was an item before Swain was created, and his kit was designed with Hourglass being a core item on him.