Inquisitors are nice in the early game for building rage (especially in multiple stacks) but they do start to lose their effectiveness later on. The problem is that they do below average damage for their cost. Now as a paladin though, that +40% does go a long way. I've never played a paladin but I've never had a fight where I was like "Wow, I'm glad I had the firepower of those inquisitors! They really contributed to the fight!"
One of my friends used to be fond of saying, "Don't make your back door bigger than your front door." What he means is, if your goal is to maximize killing efficiency, don't hamper that too much by going too heavy on defense. If your team has lots of resurrection, you will also find the need to use more of it (since those units won't be as strong in combat.)
In terms of what to replace it with, I think that depends a lot on what you hope the replacement will do. Do you want something hardier, something that does more damage, etc? Are you replacing it because they are boring you or do you feel your team is lacking in some way?
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