"Did they buff the damage or something? I love the idea of the Grenade Kit but it always seemed too weak."
Significantly. All of the kits don't use your weapons for their base damage but some other predetermined number which was previously very low, so as you said, the damage was really, really low. Now they all use a base damage in the same range that you would expect a level 80 weapon to have (based on sPvP) and yeah, big damage boost. If you build for all power/precision/crit damage, landing all #1 3 grenades on the same target will get you roughly 1.5-4k combined AOE damage, depending on crits, while stacking a ton of vulnerability. The toolkit grenade ability does massive damage if you get lucky with crits, I saw numbers in the 10k+ range.
Fantastic, they finally beefed up Engineer at the final hour before I could test it. This was to be my class of choice until I saw how horrible their damage was. Switched to guardian as result - now I find out they might be good. Gah.