That's not nearly as clear cut as you imagine. High damage can end a hold person just as easily as a dispel magic (failed high dc concentration save). The caster may not be able to last longer than another turn or so anyways. The dispel magic attempt may fail if the effect is a higher level spell effect (it's not 100% successful against every spell effect).
Dispel magic is one spell used as an example and the idea is not to save it, but to use it instead by casting a spell instead of saving it.
Also very few enemies that are going to cast hold person are also going to be downed by 18 extra damage. You would need multiple hits and multiple smites and now you are talking about multiple spell slots.
Very situation dependent. Wrathful smite has alot of stuff that can go wrong with it.
1. You lose concentration on it before you land an attack.
Sure, but then you would not have been able to Divine smite either.
2. The targeted creature passes it's save.
In which case you are out 5.5 damage on average.
3. The creature dies shortly after wrathful smite is applied or to prevent the creature from dying shortly after it's applied the party focuses on another enemy (meaning some degree of the focus fire effect is lost).
In which case Divine Smite would have done nothing more. If using Wrathful Smite kills an enemy or if it dies shortly thereafter then it would have been killed or died shortly thereafter with Divine Smite as well.
4. The enemy is already controlled with a more debilitating effect from the Wizard.
Sure, but then do you really need to use Divine Smite either? If you need to divine smite that means there is a good chance the Wizard will lose that control, in which cast Wrathful Smite is huge.
Also it is MUCH easier to shake most Wizard control spells than it is to shake wrathful smite and it is easier to shake all of the 1st level ones.
5. *You also are forgoing any other bonus action - a bonus action attack being the most common.
I don't think a bonus action attack is the most common bonus action on a Paladin. I think a racial ability or a bonus action spell is the most common, occasionally a Channel Divinity.
There are very few Paladins that do TWF or have the Crossbow Expert. Some have PAM, but not many.
6. You lose concentration on it shortly after you've applied it.
Sure and you are out 5.5 damage.
Now don't get me wrong, i'm a big fan of wrathful smite, but when an encounter is probably lasting 3-4 meaningful rounds at most, and given all the probabilities above, it's likely that on average not causing all that many rounds of fear in the first place. **It will feel great when you land it on turn 1 against a big solo melee attack only enemy and never lose concentration on it.
Wrathful Smite is best with good tactics. Ideally you attack with reach and then the enemy can't attack you in melee at all after you hit (on a failed save). If you can't attack with reach you typically take an AOO (with disadvantage) to get out of his reach after you land it. This gives him one attack (with disadvantage) instead of typically 2 or more with multiattack.
At higher levels against enemies with Legendary actions and resistances is when it really becomes even more effective because on a fail the DM either has to use a Legendary resistance on it or he really has his mobility effected, with loss of attacks and often losing legendary actions with little chance of breaking free from it, and that is with a first level spell.
I think people remember things like that more often. Like the time I cast Hold Monster on the BBEG and it failed the first 3-4 saves against the spell. If I remember correctly it had one round where it got to do something before we killed it. But things like that are very much not the norm.
Wrathful smite is different though, because there is no further save after you fail the first. It is a check and it takes an action to try.
I'm with you that optimizing Paladin play is about learning when to divine smite and when to cast another spell, it's just most other spells on the paladin list aren't clearly better - or are only clearly better in a niche circumstance that probably will not even arise this adventuring day.
Most other spells are generally a better use of a spell slot IME. I would reverse this and say using a slot for a smite is better in niche circumstances (in particular like you said when you want to use a lot of resources to do a lot of damage to one enemy).