pretty useless having a musket, when anyone can make a shield spell out of a potato and a couple of mushrooms.
Wouldn't that also make having a bow useless? And having a sword? And knives? And armor in general?
And yet, all those things seem fairly functional in the games...
Magic is too common for anyone to think about making guns. Anyone smart enough to invent gunpowder would probably be busy thinking of new ways to make the badass magic even more badass. It would come in time, but that's alot of time and most likely guns would alter the entire face of the game, probably not for the better, as well as step on the toes of Lionhead, who have been prettymuch uncontested in that setting for a while. So it's not going to happen.
Then why would crossbows have been invented? Hell, even bows. Why would smithing be invented? Why would anything be invented when everyone can run around using magic?
Not everyone can use magic. Gunpowder would be the great leveller.
Technology, in all it's assorted forms, is a labor-saving device. It amplifies the work you do.
Magic may enable an individual to do things that they physically could not - pick up a ginormous rock with a spell, instead of their muscles - but it's still work. We know it's work because you need to train to get better, and there's a limit to what an individual can do, and it eventually tires you out.
So there would still be room for technology to amplify that work being done.
Say you know a spell that can lift 100lbs... If you exert that 100lbs of force on a lever, you can lift 1000lbs.
Similarly, maybe it's just easier to toss a dispel of some sort on a bag of ammo and shoot at the enemy, rather than actually trying to bash through their defenses with fireballs and lightning bolts.
I don't know that I'd declare gunpowder the "great leveler"... There'd still be room for magic and armor and melee weapons and bows to be useful... But gunpowder could most certainly co-exist in the setting.