Actual wording from last errataAlso, remember that divine sanction is not divine challenge as was pointed out before, and in most cases a challenged monster should be focusing on the paladin. As long as the paladin is included in the attack, the allies don't get to heal.
Also, I would rule its one ally per attack that the paladin is not included that can benefit from the hospitaler ability. Not all allies.
"When an enemy that you currently challenge makes an attack against one of your allies that does not include you, whether the attack hits or misses, that ally regains hit points equal to one-half your level + your Wisdom modifier"
The use of the wording "one of you allies" as opposed to "an ally" might suggest one (in the case of an area attack), but its splitting hairs a little. Im not actually certain which way this goes. If it was to heal EVERY target of a power, then yea, its pretty powerful surge-less healing (best I have heard of really).
However, here is the text explaining the reason for the nerf
"...and it doesn’t give a monster a good way to use close or area attacks without healing its enemies."
The thing about this is they are saying that a close or area attack will result in healing enemies...plural. So, as much as I dont like it personally, I think the designers intention was that everyone other than paladin targeted by an attacked from a challenged creature is healed, surgeless healed.
Otherwise, its a house rule
Yep. Also like the Dracolich idea. There are many ways that this power can fail. I would even try having the Paladin hit with a teleport power, putting him out of range of the party.The resistance power is nasty, but its epic so it should be nasty. Just bear in mind the 5 square range. If I was DM, I would do my best to slide or move PCs out of range before hammering them.
There is all sorts of ways to turn this little nugget into a barrel of laughs.