That's true; the gulf in health between Horde and Alliance hunters is very significant. In terms of 1v1 combats, you're right in saying that paladins are better than hunters--but only when it's an Alliance paladin versus a Horde hunter. As a (ret) paladin, I know that if I can get in a HoJ on a hunter with 1000 health or so, I can kill them (with CS/double Exorcism/CS and, if needed, an Exo finisher); protadins will usually be able to as well, with triple Exorcism plus AS. Holy paladins can triple Exo, but they lack the burst to finish off the hunter immediately; that said, they should also be able to get the job done pretty quickly.
However, if a paladin is up against a hunter with 1400 or more health, as a BiS Alliance hunter will be, the victory becomes much less assured. Because the paladin won't be able to finish off the hunter with a HoJ (assuming, again, that the paladin even gets in the HoJ), the hunter will get a Disengage--meaning they can begin kiting normally. The paladin, who will presumably have used the strategy they would against a lower-health target--i.e., Exo spam--will probably be left low on mana, which badly hurts their ability to heal through the hunter's damage. Holy is at an obvious advantage in the mana department, but on the flip side they'll have to rely on Exo to finish their target off...prot can probably manage, if they can get another AS+Exo in (especially if AS crits). Pre-BoA rets will probably be doomed, depending on the hunter's skill level: that is, depending on whether they can catch up to the hunter and so kill them with a TV. Disarming pets complicate everything, of course, which is problematic as they're all the rage nowadays.
Alliance hunters have built-in advantages and neither the typical Horde hunter nor paladin can compete very well. That said, I think Cellebate is right in encouraging the creation of Horde paladins, because enemy heals are one thing that really can put a bad spot in an Alliance hunter's day.