Actually, in the math, it showed that PLD in Sword Oath and WAR outside of it do about the same damage (WAR has a 1.7% advantage); PLD pulled ahead when running with a WAR thanks to getting bonus damage from the slashing debuff. PLDs often are seen to do less damage because they're not using CoS and Spirits Within like they're supposed to. SW and CoS make up 15% of a PLD's total DPS.
If you want to get technical, it's a 4.76% increase in damage. Factoring in the 25% damage reduction, it puts WAR at 78.57% and that's assuming you maintain 100% uptime on Wrath V.2) Defiance isn't exactly a straight 25% penalty either. Defiance also brings 10% boosted crit with full wrath.
Stacking up CDs amounts to less than you might think when you are forced to delay them to stack them. You actually get more out of using Internal Release only when you've got Berserk *and* Unchained active and, even then, it's not that much (delaying it by 50% reduces the contribution to 2/3rds of what it would otherwise do over time; Berserk adds 40% damage and Unchained 33% which puts the total average contribution at 124% of the mean; since you can only do that once every 3 minutes, which is once every 3 IRs, it'll net you an extra 8.15% of its already low 2.72% increase to total damage; stacking gives you an extra .222% damage, which is less than a percent).unchained (which can be stacked with berserk & Inner Release for some excellent burst)
You're forgetting about the 50 extra potency per GCD that a PLD gets completely off-GCD. WAR doesn't get anything of the kind. Plus, Berserk is laughably weak compared to Fight or Flight (Berserk is an 8.89% increase to auto-attack damage over time and a 3.33% increase to special attack damage; auto-attack damage is roughly 25% of your total damage, so that means that Berserk adds a whole 4.72% to average damage; Fight or Flight is a 10% increase to damage). WAR gets a lot more *multipliers* to its damage, but PLD gets a lot more straight up added. They end up doing within 5% of each other on OT damage, MT damage, and MT enmity.So in ideal conditions the WAR should be pulling ahead while tanking.