Well hardly any paladins ever used this spell in era because it's so badly tuned. No argument there.
It's really an emergency rescue spell that is the original idea behind modern spells like Burst of Sunlight, Protective Confession, Valiant Deflection, Force of Reverence, and Dichotomic Force. A quick casting, longer cool down spell that protects the target/group in some way while generating some snap aggro on the mob. In this case the +hate comes from the Rune.
Looking at the modern spells, Divine Favor needs: a larger rune to be effective (350 absorb damage and +hate), a shorter cool down (1 min), and friendly target type, to really be worth a spell gem in Kunark era.