It only works if the enemy is under 20%, kind of like a ranged execute.
What one must consider is how much is required for a paladin to actually get them down to 20%. besides, unless it crits in order for the hammer of wrath to kill the enemy in one hit without a crit the enemy must have less than 2200 hit points total. That's not going to happen, and if it does hit its only 500 damage. Shaman earthshock does the same, but ours isnt' instant cast. hammer of wrath can miss, too (which looks really embarassing, especially if its point blank.)
Paladins' complaints about dps are much more on the lines of being uncontrollable rather than too little; seal of command can crit for 2k, but its very, very reliant on chance. Reliable damage, then, is what is pathetic. You guys shoudl find videos by Jamaz from the realm Shadowmoon; his reckoning bombs hit 2k very frequently (in one instance he utterly destroys 5 level 60 rogues and a 52 priest, taking them on 3 at a time.) With full crit and str gear, a double crit and double proc can easily get to 2-3k damage. The problem is, that doesn't happen by command; it happens by chance. paladins have always wanted strikes for consistent dps, but we havent gotten any of that. Most paladins still press seal of command and simply pray for a proc when autoattacking.
Hammer of wrath is great; perhaps the only buff paladins have had since release. Paladins before had no way to catch runners or finish off a final 1% health if they're out of autoattack range.
(tip: the hammer is 1.5 second cast. all one has to do it walk behind the paladin and the hammer will cancel, forcing him to have to recast. Since its only 1.5 seconds, turning around is often too slow for the spell to execute. For this reason i always try to get as much distance from the enemy as possible without going out of range when i throw my hammer.)