Are bards better than rogues in IWD2? I've read conflicting opinions on this so thought of asking here.
It has spell casting, so yes.
Bards get some decent spell variety that combines divine and arcane spells. You still want a dedicated divine and arcane spell caster in the party but the Bard can take a lot of the load off them by taking up the utility stuff that doesn't need crazy amounts of spamming or high DCs to be effective. Stuff like Bull's Strength/Cat's Grace/Emotion: X/Spirit armor are all great candidates. They also get some good disablers, like Hold Person/Horror/Dominate (see my post above for how abusive stuff like this are), so Greater Spell Focus: Enchantment will let them screw enemies pretty well. 90% of enemies in most encounters are some kind of fighter so they'll have low will saves to begin with, any kind of DC boosting and you're very likely to score hits. Some of these spells Bards even get a level or two earlier than the "real" casters, like Emotion Hope is level 3 for them where it's level 4 for everyone else, this helps alleviate their overall slower spell slot gaining. Their songs are kind of OK IIRC, don't really remember them much or how abusable the Enthralling one is. Like clerics they make decent fighters when buffed (and with a cleric and a bard you're going to have a lot of buffs to go around).
Rogues trade everything above for the ability to get 1d6 + 1d6 per two levels if hitting the "back" of a monster once per round. It's kind of finnicky and not great to begin with. It sounds nice, but fighters just straight up hit way more often from higher AB while clerics and bards buff themselves enough to essentially be as good as fighters or better. They also have evasion which means you can use them as bait for fireballs and they'll likely take no damage while in the AoE. Actual thievery skills really aren't that important at all.
Overall I think that's a pretty solid ensemble. I've got a few of the better ECL races (Deep Gnomes of the extra Wisdom, AC and non-detection, Aasimar for the Wisdom, and Drow for the Magic Resistance and bow proficiency), as well as a few non-ECL races so that at least some of my cleric don't lag behind in spell-casting levels. I have the Cleric of Tempus as a half-orc to take advantage of the axe focus. I'm pumping Spellcraft of the Cleric of Lathander to get Spirit of Flame, obviously Rapid Shot is everyone else's first feat because it doubles damage output with slings.
I don't think slings are a terribly good idea. Compare:
Left Hand of Darkness w/ normal ammo:
-1/-1 AB (from rapid shot +1 AB)
1d4 +1 damage (2-5, average 3.5)
Crits on 20
Heavy Crossbow w/ normal ammo:
+2 AB
1d8 + 2 damage (3-10, average 6.5)
Crits on 19-20
So you've spent a feat to get a weapon that is going to hit far less, and even if it hits 100% of the time you'd only do .5 damage a round more (not including the crit rate). This is a departure from previous IE games where slings got extra damage from strength, and from D&D 3rd ed where Heavy Crossbows are supposed to take a round to fire and then a round to reload. You do get slightly better AC but that's marginal IMO.
Not sure how it looks down the road with higher levels and better items. Obviously when you get 3+ attacks with slings they might edge ahead, but then taking -7 to your 2nd attack (from rapid shot and the normal -5) means you're getting increasingly unlikely to hit. I do know that there are several crossbows that just flat out give 2/3/4 attacks per round. Probably not enough of them to arm the whole party, but you already have one with bows and the rest can have throwing axes/darts (which do get the strength bonus).