With the advent of TBN and Quietus it is a perpetual AoE machine, consistently outputting damage if done correctly. Dark Knight greatly leads Paladin in raw DPS output in AoE. It lacks behind only Warrior, which has a lead due to downtime in dungeons.

AoE as a balancing tool should never be used. Different classes should be competitive, but the idea of every class being similar in damage isn't necessary, and definitely not required.

Also as a footnote - if on Warrior, using 3 GCDs putting up Eye when pulling wall to wall is very typically a DPS loss and shouldn't be done. Overpower spam is much more effective in most situations.