Tough question. Personally, I don't see why not.
From the PRD:
Using this ability is a standard action, unless the paladin targets herself, in which case it is a swift action.
In normal cases, it's a Standard Action to activate. If you're targeting yourself, it becomes a Swift Action.
Many GMs would rule that you can't target yourself with it twice because you must use the Swift Action to heal yourself, since the text implies you can't. However, I think it's an either-or case when it comes to using it for yourself. Additionally, you're giving up one round of full attacking or casting a spell to heal yourself, and you're still expending Lay On Hands usage for it, so it still seems pretty fair.
Thanks, so far I have been allowing it so far and it doesn't seem overly imbalanced, however it sure does seem that RAW it shouldn't be allowed.
And that's technically correct. RAW, it changes action designation when used to heal yourself, so unless you can use two Swift Actions in a round, you can't heal yourself twice with Lay On Hands.
That being said, I find the intent is an either-or option. You can heal (or harm) a(n) (undead) creature as a Standard Action, or yourself as a Swift Action. By rights, you count as a creature, so it should be applicable, since you could also use Lay On Hands to heal yourself and one other ally (or undead enemy) in the same round, making you not able to heal yourself twice just seems stupid, and it doesn't add up in terms of balance issues.
Here's a bunch of min-maxing statistics to prove how much investment it needs to be broken.
Level 8 Pit-Born Tiefling Paladin with a modified 14 Constitution has an average of 64 hit points total.
By stacking the racial FCB (as much as possible, anyway), taking the Fey Foundling + Greater Mercy feats, and having Bracers of the Merciful Knight (which takes a big chunk of your WBL), we're looking at a base 7D6+21 when straight healing yourself. Assuming average rolls on that, we're looking at 45 hit points of healing per use.
At that level with 2 attacks, that's about as much as a single hit from a competent melee enemy.
Assuming a modified 22 Charisma, we're looking at 12 uses per day (4 base, 6 from Charisma, 2 from Bracers of the Merciful Knight); so it can negate ~12 standard attacks from a competent melee enemy per day. With a combat taking 3 rounds, and assuming each round includes full attacks, you're able to sustain for 2 combats.
Hardly gamebreaking, to be quite honest with you. It can actually result in the PC wasting his resources just to make sure he can stay alive.