Yes, I agree with you that the way the power is intended to work, this would not be a problem. You are right, because a large party would have to be spread out, and the other party members would not be able to rest and heal or recharge their encounter powers. And, if it worked out that way, I might let the power be as is. But, I believe it works out differently. It is possible I am missing something, and I hope I am, but reading other posters in various forums leads me to believe I am not. That's why I am writing here, to find out if I am missing something.
If a cleric is standing on the consecrated ground (oddly named sanctified ground in the power itself), then the cleric effectively cannot die. As long as a monster cannot hit the cleric for ~3/4 of the cleric's HP in one round, then at the beginning of the cleric's turn the cleric returns to 0, then heals to ~1/4 HP, uses a minor to sustain, stands, and attacks. Meanwhile, the monsters take damage each turn from the ground, or from an occasional hit from the cleric. There is no need to ever spend surges, no need to ever use encounter powers, and no need to ever use any other resource. Now, if you are an ally of the cleric, you would be unwise to not run over to the ground yourself, and stand there. You become effectively invincible as well, so you should not waste healing surges, encounter powers, or any other resource. As long as the party is less than 10 members, then everyone stands there just fine. Only very special monsters (those with reliable pull powers, massive damage, reliable stun powers) even have a chance. But that chance is minimal, because the other PC's, who are mostly just standing there, can be ready to undo any pulls or damage if necessary. Thus, at the end of this encounter, all PCs are at a little over bloodied value in HP and at full powers and resources, which is a fine position to be in. This continues until the 5 minutes are up, at which point, the PCs finish at a little over bloodied value in HP and at full powers and resources.
This is what I mean when I say this power makes at least one encounter per day into an encounter with no doubt about the outcome, one that encourages boring tactics, and that costs no resources.
I thought about it while going to sleep last night, and I'm probably going to suggest the OP's and others' solution to my party: the power works like regeneration, which means it doesn't heal when the PC is dying. With this change, the power will probably still contend for best power at 5th level, but it will operate the way it was intended, as others described above. I'll see what my party says.
Thanks for your thoughts about this power.