For the upcoming patch, Blizzard was planning on making the Forbearance debuff (gained when you use Divine Shield, Avenging Wrath, or Blessing of Protection) give a -15% penalty to damage. They withdrew the nerf in the face of the large outcry.
I'm not too thrilled with the nerf, as it does hit paladins hard, but I do see the problem. Using BoP on a mage, who gets 12s to freely nuke a melee class, is insanely powerful, especially in Arenas where it is to the first death. So that could stand to be nerfed. But by hitting Forbearance, you hurt paladins--who already have the lowest DPS--even more. Especially when you consider that the debuff lasts 3 to 5 times longer than the ability you used. It's really over-kill, and I think that a more targetted nerf would be more appropriate.
Here's what I would suggest:
1. Blessing of Protection grants the Forbearance debuff, which gives -20% to all damage and healing spells.
2. Avenging Wrath and Divine Shield do NOT grant Forbearance.
3. Avenging Wrath and Diving Shield share the same cooldown. You can't use both of them back to back, or at the same time.
I think this restores some balance to the situation. It returns Blessing of Protection to an emergency cast, and does not allow multiple paladins to chain BoP. A paladin can now chain BoP and Divine Shield, but her healing and damage will be significantly reduced for a full minute. A heavy price, in my opinion.