Underrated? Yes. Underpowered? Not at all. The Halo 3 Magnum was very good. People are just mad because you can't run around and skillesly 3 shot people from across the map. The Magnum can be useful by itself to take out enemies who have low/no shield or to get guys who are just out of your AR's range. You can also use it as a decent support weapon.
If you are really good, you can actually kill an AR user faster than he can kill you.
Now, most of you forget about dual wielding. If you are accurate, in close quarters the Magnum can be dual wielded with many weapons (SMG, Plasma Rifle, maybe the Spiker) to get a 3 shot kill if you hit the head. A Magnum with a Plasma Pistol is also a noob combo, and a Magnum can be dual wielded with another Magnum to kill a BR user in 4 shots faster than he can kill you. And strafing (like you're supposed to with all weapons) reduces his chances of hitting you, especially with that 3 shot burst he has.
I've killed many people with those tecneques and the Magnum by itself. It's because I though about how it can be used, and was good with it. I've taken out snipers, BR users, AR users, Shotgun users, I think a guy with the rockets once.
People rely on weapons that you don't have to think with. I don't understand. If you put a little thought into the other weapons, they can be devastating, while still having their weaknesses.
[Edited on 09.22.2011 8:25 AM PDT]