It costs you your opportunity to do 2d6 damage with Thunderous Smite AND possibly knock the enemy away and prone, or 1d6 psychic damage with Wrathful Smite and a good chance to render it combat-ineffective. Is the extra 2 points of damage (Thunderous Smite) or 5.5 points of damage (Wrathful Smite) really that critical to your combat strategy?
Faulty assumptions.
1. You assume my bonus action is free. I had great fun with a polearm master paladin. A GWM paladin can also have bonus action taken on any crit or kill.
2. Your opportunity cost involves spreading over multiple round. But the opportunity cost of THAT is not killing it faster. If round when when closing you cast a smite, then round 2 did multiple attacks, landing that smite and also Divine Smiting, the foe would often not get another action, especially with a ranged character helping. Denying a foe an entire action because it's dead is a greater debuff then the rider on either of those two first level smites.
RE: "smite on a crit." It's not really compatible with the initiative system I use (everybody declares, then everybody acts), and my players find smiting on a crit absurd anyway (at least, I remember one paladin's player openly mocking the idea of deciding AFTER the hit lands whether or not you're going to smite), so I have no experience actually playing with it.
At your table with house rules the balance can absolutely be different. I'm talking from the perspective of the rules in the book.
It isn't enough for an appropriately-sized smite to drop an opponent where a normal hit would not. You have to do that on a turn where the enemy is about to inflict 70+ HP of damage on the PCs before anyone else can act. Could be a table thing, but IME that's quite rare, outside the glassy glass cannon Meteor Swarm scenario already mentioned, or equivalent ones such as an already-damaged Flameskull casting Fireball when four or more PCs are in Fireball Formation.
Fair point. I'll meet you halfway - it needs to kill them without any other PCs who would be able to do so before their next action. If a PC in melee halfway across the map goes, that's not too helpful. If the life cleric is the only other one to go and can't reliably do enough damage to drop him, same thing.
But yeah, if your friend the archer can finish him off then it's a bit of a cascade effect - that's someone else not hurt but who knows if that damage in the end would be > 70 points of healing, combat is far to chaotic to tell.
Since players (at my table) don't know the monster's remaining HP or spell loadouts, they wouldn't even know for sure they were in this optimal scenario even if it did arrive--you could waste your spell slots on smiting AND STILL get Fireballed, and now you will have trouble even healing the damage because you already blew the spell slots.
Oh, players at my table don't either. But I do use descriptive terms - barely hurt, staggered, bleeding freely, on it's last legs - enough information from the character that the players can make an informed choice often.
Divine Smite isn't a bad capability to have, but I predict the proposed nerf (basically removing it from the game entirely) will have little impact on game balance.
It would entirely nerf my polearm mastery paladin. It would hurt every single paladin with extra attack who has a reason to kill something QUICKLY. Remember, it's not always about HPs - maybe they need to slay them in 3 rounds to stop a ritual, or save the commoners, or whatever.
It would have a large effect on the paladin as a class, just not a large effect under your house rules and with HPs as the sole metric.