I think this turns Safeguard Smite into something potentially more flavorful and useful than its original incarnation. Instead of the paladin making a smite and somehow granting an AC bonus to an ally, it's the paladin acting as an instrument of divine protection and retribution, smiting a marked opponent that has attacked one of his allies, and interfering with the attack (giving his ally an AC bonus) as a result.
I like your idea, though I'm wondering if it maybe should be completely re-written to work as a true "protect your ally" sort of power. Like so:
Shielding Smite
Paladin Attack 1
Encounter • Divine, Weapon
Standard Action (Special)
Special: You may mark an ally as being under your protection. Should your marked ally be attacked, you may use this power, shifting up to 5 squares before attacking, as an immediate interrupt against the opponent attacking your marked ally, provided you are within 5 squares of that opponent.
Melee weapon
Target: One creature
Attack: Charisma vs. AC
Hit: 2x[W] + Cha.
Effect: Until the end of your next turn, your marked ally gains a power bonus to AC equal to your Wisdom modifier against the opponent targeted by your shielding smite attack.
I don't know if it's possible to mark allies in this way, but the idea of the paladin declaring the wizard, or whoever, under his protection and then getting a free whack at whoever tries to attack his charge, hindering that opponent's ability to attack said charge, sounds pretty appropriate to me.
I'm not sure how balanced it is with the other 1st level powers, though. That's one thing that's going to take some time for me to get a feel for with 4e.