Hmm...
@Nail et al.: If in your campaigns monsters who surrender are always killed, it seems clear to me that they would stop surrendering pretty quickly. Of course, if your PCs constantly move from place to place, outrunning their reputation, or just do dungeon crawls where the slaughter has no consequences, then I agree with you allowing the party to end entire combats through intimidate would be overpowering... at least 'on paper'. Still, I would think that as soon as a witness escapes to tell the tale, the tactic will no longer work at that adventure site.
If you view it as a way for the party to end a combat that they're winning anyway, however, then maybe it's just a way for the party to keep the story moving and get through more encounters in a session? Do you feel the party has not 'earned' their XP if they only get through 2/3 of the combat round by round, then use a skill check to truncate the grind? I would make it very difficult for the party as a whole to intimidate all the monsters in the encounter at once, unless the monsters were already clearly losing (or thought they would lose).
----
On a more general note, there is a philosophical gap in this conversation that we probably won't be able to bridge. Some people feel that when the party enters combat, they enter a sub-game where only 'power cards' are allowed to affect monsters and the only exits are victory or death. Outside of combat, obstacles are to be overcome using skill challenges or possibly role-playing.
Personally, I am more comfortable with a game where the border between combat and role-playing is fluid or non-existent. I think players should be able to transform a combat challenge into a role-playing challenge in some circumstances, for example:
*ambushed by bandits, after 2-3 rounds of combat while the party is trying to avoid killing, the cleric manages to convey to the leader that the party was coming to negotiate with a certain NPC wizard in the outlaw band.
*A nasty bar fight breaks out, but a PC manages to organize it into a more civilized wrestling match.
*The party wizard receives a telepathic message that the Frixian ambassador is really an assassin, who will try to kill the king during negotiations. Passing the word to his colleagues, the party jumps up during a diplomatic meeting and attempts to capture the spy.
Would everyone consider these reasonable situations that D&D should be able to handle? The first two clearly involve one PC using diplomacy while the others are fighting, to change a combat scenario into a noncombat scenario. In the third, a non-combat scenario (perhaps a skill challenge that the DM has put great thought into) is interrupted by the party and gives way to combat.
Furthermore, Intimidate isn't the only skill with combat uses--consider Bluff! This is an at-will power for rogues to gain combat advantage against their opponent. Too powerful? As for the other skills, the DMG explains how clever stunts with athletics, acrobatics, or whatever the player can justify should have an effect on combat--if the player meets a certain DC, they can even do damage on the scale of an encounter power.
So I put it to everyone listening that (1) skills are meant to be used in combat, not just in skill challenges; (2) the players should and do have the power to change the arena of a conflict from combat to role-playing and back again, using player skills and their own creativity; (3) yes, monsters/NPCs have a similar ability.
If a black dragon has the party on the ropes, wouldn't they accept an offered truce? That doesn't mean they will stand by and meekly let the dragon slaughter them if the encounter turns back to combat. Likewise, while a monster or NPC may stop fighting due to an Intimidate check, their withdrawal is always provisional--for the moment--until I can get the jump on you!
So when the party intimidates a bunch of monsters to end an encounter early, it is merely a storytelling convenience to do away with the last few rounds after victory is almost assured. When a single PC intimidates a single monster, they still have to deal with that monster--if it runs, it may come back (and soon!), or run off to bear news of the encounter to allies; if it drops its weapon, a PC will still have to guard it, etc. So that situation is more akin to grappling--it might take a PC and a monster out of the fight.
All right, I think that's enough for now. To sum up--Intimidate might be too powerful an option in some campaigns, but I have trouble thinking of situations in my own campaign where it would cause problems.
Cheers,
Ben