Yeah paladins have their uses, though I do have to agree I somewhat share your opinion on why play them.
As a single class there is no real use, since you lose so much in the form of feats etc. compared to fighters just to gain a few spells.
In pre-epic levels though, multiclassing paladin is highly viable.
All their abilities are strong when you don't have too much to smash on. And you can grab a few levels of fighter for extra feats etc. When your weapons and gear isn't all >+6, those spells like holy avenger shine with usefulness.
High charisma classes also benefit from having a few levels of paladin. Cleric with high charisma can take 2 paladin for charisma bonus to saves (and maybe 2 more or 2 of fighter for full bab @20). Sorcerers with really high charisma benefit from the saves bonus even more and laying of hands provides a tiny heal once a day. I'd also classify paladin as a good option for sorc based spellswords, at least those two levels.
But yeah paladin is mostly a multiclassing toon in my opinion and in FR setting, most paladins orders allow/encourage multiclassing (such as mystra as wizards, ilmater as monks, yondala as monks etc.). Not saying that the lore multiclassing options are as viable in NWN OCs as they sound though
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