You are right in thinking both that Celeste is reached via a teleporter, and that a certain condition has to be fulfilled before it can be reached. Quite simply, the teleporter to Celeste does not become active until that condition is fulfilled – and it's not the weird blue tripod thing. You are also right in thinking that Celeste is up in the clouds, but not that it is another wizard city unless I have misunderstood what you mean by a wizard city.
You also enquired about stealing. One of the quests on the Dark Path is that you get an item from someone. The obvious and unthinking way to do that is by killing that person and taking it off his/her corpse, but you can also steal it from him/her (no spoilers! ), which I found preferable.
I agree that much of the combat is as you describe it, simple hack and slash, but in some cases there is a little more skill involved. For example, you can sometimes find places where you can strike without being hit in return, either by finding the right position to stand in (or hide in? ), or by using the right spells. I don't know MM7 well enough to cite any examples there, but in MM6 there's a room in Gharik's Lab that you can mostly clear by bouncing Rock Blast missiles into the room, and outside, you can thin out the opposition on the other side of a hill by using Death Blossom as a howitzer-like missile.