So what exactly IS the issue with Warrior?

[Leiron]

WAR should be doing more in tank stance for 2 reasons.

2) Defiance isn't exactly a straight 25% penalty either. Defiance also brings 10% boosted crit with full wrath. This almost makes up for the 5% base difference between defiance and shield oath by itself. However, defiance also allows the use of inner beast (a solid dps move with no penalty when used with infuriate), and unchained (which can be stacked with berserk & Inner Release for some excellent burst).

Its a 33% damage loss for using defiance.
Its 25% for a Paladin.
The 10% crit +maim+SE just barely overcome the debuff.

So in ideal conditions the WAR should be pulling ahead while tanking.

Barely.
its a very small amount.