And is backstab good later in the game? or does true sight make it worthless?

Hide in shadows or turn invisible, walk behind someone and attack...some weapons arn't suited for backstabbing...like Two-handed swords and blunt weapons. Backstabbing is always usefull, and next to the spell Time Stop my favorite thing to do...especially when you do 'em both together.

Try using potions of invisibility for multiple backstabs, make sure you are behind your victim.