Aye, the time factor in the term 'DPS' is referring to time spend casting. I.e. 'damage' per 'second cast time' and not damage/second for the actual spell.
'Damage over Time' spells seems to be what's throwing a lot of people off. But even though it's a DoT the principle is just the same. Essentially DoT's were better in the sense that they create less threat/aggro with the initial cast by spacing the damage out over a time duration. Damage/DPS threat is almost a none existing issue in Rift though (sadly), so that's no longer a concern in any way.
How or why DoT's are making it so hard to grasp for a lot of people I've got no idea about though, as this has always been the case.