Well, it doesn't cancel it out, it just mitigates it somewhat. You are still at a -2 penalty vs not using it. So you're giving up approx. 10% hit rate for an x% bump in damage. At lower levels the +3 damage is decent, but it doesn't scale well (if it's only +3 all the way through)
It actually depends on your existing chance to hit. The hit rate change is 2 outcomes, but it is not a 10% difference in due to hits. It's actually closer to about 20%. However, this might be mitigated by the amount of damage done across the outcomes you have remaining.
The math on this becomes pretty simple:
P is the number of outcomes that lead to a successful hit before power attacking, x is the average amount of damage dealt with a successful hit, and d is the amount of damage power attack gives you as a bonus.
This gives you the formula (P-2)(d) > 2x, or P-2 > 2x/d.
Then, P can be calculated as 21 - R, where R is the number you normally need to roll to hit, which in turn can be calculated as D - A, where D is the defense and A is the attack bonus.
21 - (D - A) - 2 > 2x/d
19 + A - D > 2x/d
19 + A - 2x/d > D
Thusly, you can easily calculate at what Defense do you start to see profit from Power Attack. Then you can use that to make an informed decision about whether or not you want to take the feat.
Take a level 8 fighter, using brash strike, with an +2 execution axe, 20 Str, 18 Con, and Expertise, but not weapon focus.
His attack bonus with this power is 4+5+2+2+1 for a total of +14. His damage is (1d10+2)+5+4+2=av. 18.5.
19 + 14 - 2(18.5)/3 > D
33 - 37/3 > D
33 - 12.33 > D
20.67 > D.
Most equal level monsters have a defense of 22, with some 20s and a few 24s. It's on par about, so it's not really a worthwhile feat to take.
However, on a polearm fighter, used with attacks of opportunity, it's a much different story. Instead of 18 Con, go 18 Wisdom. Take a glaive, and use HBO so you can reaping strike with those AOs. Go level 11... and make the weapon + 3. The attack bonus in this case is 5+5+3+1+4=18, and the average damage (which doesn't count strength bonus because with reaping strike hits or misses both apply it) becomes 2d4+3, or 8.
19 + 18 - 2(8)/3 > D
37 - 16/3 > D
37 - 5.33 > D
31.67 > D
Looking at average AC at this level, high AC would be 27, low would be 23.
For -this- build, Power Attack would be an exceedingly beneficial feet. Even if you took Weapon focus, that would only change the formula to 30 > D which would -still- mean Power Attack is working for you.