I definitely feel some frustration in constantly playing with and against pyro-heavy teams and, while I don't think the pyro is terribly unbalanced, I do think something is wrong with the backburner.
I don't know if the game actually calculates damage like this, but it feels like the flamethrower (and backburner) is an area of effect weapon. Unlike a pistol that clearly does damage along a single angle to a specific point, the "flames" seem to consist of multiple elements that collectively deal damage as they come in contact with an enemy.
To visualize the particular area of effect the flamethrower/backburner seems to have, imagine a gust of wind traveling toward a cone. Instead of specifically impacting the front and immediately dissipating, the wind (at least in part) diverges toward and converges from the curved surface of the cone, giving it the appearance of "wrapping around" the cone as it passes.
This effect always seemed to occur with the regular flamethrower: if you stand too close you only deal some damage to whichever side of your opponent faces you; attack from too far away (but still close enough for the edge of the plume to hit) and experience a similar effect; but if you attack from the right range the plume of flames seem to "engulf" the target and do more damage. The backburner seems to operate this way as well, except when attacking from a range that allows the flames to engulf the target, you crit automatically since some of the the damage is calculated as hitting your opponent's backward quarter.
In other words, the ability to deal damage calculated as coming from behind your opponent doesn't totally depend on your initial angle of attack when using the flamethrower/backburner.
Whether this is what Valve intended or not, or even if this is really what's happening, I'm not sure. However, it seems to fit what I have observed and many have complained about.