Honestly, anything that lets you sub out one Attribute for another reliably is terribly strong to start with. We have a character who picked up Mage Hands as a throwaway, and since the first time she actually used it, it's become pretty much all she does. The only thing that's really saved it from dominating the game is that since she wasn't building her character to abuse this, she dumped Dex, too, so she can't regularly, say, Grapple enemies and then hold them locked down with her 15 Strength.
I'm not complaining because it's not my character and I don't know how the player feels about it, but as an observer I'm not sure I like the way it took over the character. Even with her, as I say, not having an optimized build for it, it's eclipsed all her other options.
Now, again, Mage Hands is actually stronger than Telekinesis for the simple fact that you only need Spirit for it, while TK requires both Spirit and Mind. It's not too hard to focus on two stats, but trying to get Spirit, Mind, and Dex all super high isn't really an option. So I like Telekinesis better to start with.
The take that MH could manipulate things while TK could just... pick them up and move them (and thank you, Vaminion, for digging that up!) -- it made them different, and you know I'm always for that, and I'd guess that's why they went that way first. But I expect the idea of abusing falling damage has just been pushed too far and we only have ourselves to blame for that. And thematically, thinking about psionics, Levitation is different from Telekinesis and should be its own ability.
...But I do think, in my daydream world in which I have the rights to Torg and get to write Eternity 2, I'd nerf Mage Hands first. When I look at mage hand type spells in other games (for example, "Mage Hand" in D&D), they're usually about small manipulations, not punching people. I'd probably just take out the ability to use Spirit for Strength altogether and say it purely lets you add range to things that don't have range, but everything is still based on all your actual Attributes. Or even say it just outright has a Strength of five. It's supposed to be a utility spell, for picking something up out of a fire or pushing a button on the other side of a chasm to summon the bridge. It's not supposed to be a combat behemoth.