Really? It's seems to be worse than the Rapier in about every way. (if you consider that the Lao Tze only carries one cavalier compared to four rapiers) I would always prefer the Rapier over the Cavalier, exept when i need to keep the second weapon bank for specialist weaponry.
There are a few other strange things regarding balance, but i guess that's all stuff that will be finalized for R2? But since the Lao Tze was actually used in R1 i thought i'd mention it.
PS: The Lao Tze has Hellfires in the default loadout, despite the fact that it isn't compatible.