What's worse is that I don't think the game can be played with just a controller because the Skylanders-styled games are pretty nice and relaxing A-RPGS and this seems pretty nice.
Or am I wrong here and the characters can be unlocked without the figures and change via menus?
No, you need the figures. Ideally, this is a good thing. If this takes off, figures should get rereleases with each game as the roster grows.
Unfortunately, I actually fear the opposite to what Hentailover does - I fear they're playing much too safe with this. With almost everything being relegated to chips, rather than promoting a rich roster and a need to run out and get all the figures, I suspect they have very little faith in this project compared to how Skylanders and Disney Infinity roll.
On the other hand, I wouldn't count on BW3 yet based on that - given we're now sitting between two generations, we may be waiting for a while yet for it, if it comes at all, since it's not exactly using the PS3 to the fullest as it is anyway. To have to jump to the PS4... It'll either be awesome or mean we won't get one until 2016.