That said, it's not exactly a "Daily" either, as it's not "used up" at the end of an encounter.
I'm not quite sure what you mean by that. Are we talking about Dailies, or Encounters? Since when are Dailies limited by encounters (beyond the ones that specifically last an encounter)?
Put differently: Are there any other Dailies that you can activate during an encounter, then activate again during a short rest, then activate again during another encounter (etc)?.
No, because there aren't any dailies (for the most part) that can be used more than once per day. Better question: Are there any other At-Wills that can only be used a certain number of times per day?
It is At-Will. You can activate it whenever you feel like it. But - and we all know this - you may only use this particular At-Will as many times per day as your Wisdom mod, and only if you have enough healing surges to pay for it.
Do other Dailies have a limit as to when you can use them? They can be used once per day, of course. Any other limit? Any other rules beyond, "This power can only be used once per day"?
But let's say you only have a Wisdom of 12- then, LoH can only be used once per day. Let's say you take a Paladin Daily that allows the Paladin to spend a Healing Surge to heal someone else for their surge value. What's the difference between these two powers?
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It's a clarity issue. It's easier to explain an as at-will with a limited number of uses than as a daily with special rules and exceptions. It preserves dailies as "use once a day," even if you would most naturally describe LoH as "use X times a day."
See, that's where you lost me. Dailies are powers that are only usable once per day. Encounters are powers that are usable once per encounter. At-Wills are powers that don't have a limit to how many times they can be used. So the difference is between an At-Will with special rules, or a Daily with special rules?
How is it easier to explain it as an At-Will that isn't really At-Will, instead of a Daily that can be used X number of times per day? To me, the difference between At-Wills, Encounters, and Dailies is how often they recharge. Dailies recharge after an Extended Rest (i.e., each day). Encounters recharge after a Short Rest (i.e., each encounter). At-Wills don't need to recharge- you can use them forever. Yet LoH recharges after an extended rest. I don't see how it fits as an At-Will.
I guess the general populace here seems to see the issue completely different than me- which boggles my mind. But, I guess that's how it is.
You've got to admit, though, it's labelled weird, especially when compared to similar powers like Healing Word.