You forgot the other part of the math equation: The size of the sun.
The size of the sun is 1392000 kilometers across, and as for distance, 1520000 km.
To calculate how much smaller things become by distance, you can use the angular size formula. I found an online calculator that would do the math, and the final result is 5.24 degrees.
Well, that's 5 degrees of the sky that the sun should take up then, and that's about how it looks any time I look upwards. As for the inverse law, you'd be right, except that our eye is a lens, and takes all the light it receives across the entire surface, and focuses it onto a single point: The retina.
RE: The Inverse Square Law of Light