Indeed, the dps penalty in Shield Oath is 20% less damage done. Also, stance switching on the PLD will reset all your combos. So it is not possible on the PLD to go in Sword Oath for a quick +20% damage Royal Authority (PLD's dps skill) then quickly go back to Shield Oath to cover that next auto attack.

You can stay in Sword Oath by default and only go Shield Oath for the tank busters. But that significantly raises the healing requirement on you. If your healers are fine with that, then sure, why not. But that should not be done without healer consent.

Basically that's a tank who prioritize dps over mitigation and essentially makes use of what otherwise would end up as overheal HP. PLD stances do not modify their rotation, so it's possible that PLD who talks about maximizing dps with a healer who regularly will be overhealing, should by default be in Sword Oath and only switch into Shield Oath for the tank busters. In that case, yes stance dancing exist for the PLD.