Balanced. And I have played one, and played in a party with one. Understand that I am not just theorycrafting.
The most important thing in Pathfinder combat is getting full attacks. If you get full attacks off on enemies, they are going down, and fast.
The most powerful strategies in Pathfinder involve classes that deny the enemy full attacks (Spellcasters, people on horses), and builds that are guaranteed to get full attacks (Archers). If your PCs are constantly getting full attacks on a BBEG, he's going down, fast. If your PCs aren't, he'll stay up. The bonus from a paladin smite is significant, but not game-breakingly so.
In practice, the Paladin ends up being okay in normal combats, and one of the stars of BBEG combats. The same could be said of any spellcaster. Archers and fighters tend to be the stars of normal combats.
Note that my claims are for a 4-5 person party. A Paladin's Share Smite ability is probably overpowered in a 7-8 person party.
In a 4-5 person party, all you're really doing is giving 1-2 other people your power (odds are at least 2 of the people in your party aren't "attackers", per say). In a 7-8 person party, you're giving those big bonuses to 5-6 people, which is sort of unreasonable.
-Cross
Even in a 7-8 man party its not unreasonable, just increase the number of enemies to match. If you don't increase the enemies the sheer numbers will be an issue, even without the smite.
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