It didn't always have the armor penetration, and it didn't used to be so easy to land. However, if you must know I've always had an issue with smash spec just for the sheer fact of having such a high damage ability be an AoE. However, before it could be evaded, not so much now. It is literally a low risk high reward spec. The top dps in a warzone now are always smash specced players, ALWAYS. It's not even close.
While I essentially agree with you, the problem is the entire rage tree revolves around smash. Significantly reducing the smash damage because it is AOE will make rage juggernauts and their republic counterparts terrible in one on one encounters which is still important even if the focus is team vs team.
What I personally think would be a good solution is change the AOE mechanic of smash so that the primary target is hit by the full amount, but the secondary targets that are within the AOE range take less damage. Or reduce the amount of damage to each target depending on the amount of players it hits. (say 1 player hit takes a potential 6000 crit, 2 players hit would take a potential 5000 crit each, 3 players or more hit would get a potential 4000 crit each.)