There are some ways around this. For instance, it doesn't necessarily follow that the magic-user will kill his opponents once he's cast Sleep on them. It's much more interesting to take some other approach, such as capturing them and imprisoning them (giving an interesting "jailbreak" adventure) or putting them on an undesirable quest, etc. There are a lot of interesting possibilities for a villainous M-U to mess with a party, including selling them off to humanoid slavers, or teleporting them to a foreign land.
And of course there's always the chance that the MU doesn't have the Sleep spell and will instead use Magic Missile or Charm Person or something else entirely. Random spell generation goes a long way in ensuring that this is spread out in a "fair" manner - and any spells known may of course be in their spellbook for PC magic-users.
But another thing I was thinking about comes from Monsters & Treasure in OD&D. Dragons' breath weapons, like a magic-user's spells, are a limited quantity of high-powered attacks. What's interesting is how they're handled:
Breath Weapons: The Dragon is able to use its breath but three times per day, so sometimes it will bite instead. To determine this simply roll two six-sided dice; a score of six or less indicates the Dragon will bite, but a seven or better indicates it will breathe.This seems like it could also apply to magic-user spells with equal utility. After all, the referee is basically deciding when the MU will use one of their limited resources for the day; if it's possible to fight in another way, especially the traditional evil MU who hides behind flunkies, that spell might come in handy for the MU later (if he survives). It's also one of those little sub-systems that I think goes really well into old school D&D - just an odd little roll to tell you a specific thing.
So with all that as set-up, I think it's time to stop worrying and embrace the evil wizard.