Yes, Pallys can DPS as Ret. Wars can DPS as Fury/Arms. But is that what the class is good at, really? The three 'true' hybrid classes Shammy, Pally, Druid; have two viable and usually one less viable build.

Shammy Can DPS(Range or Melee) or heal, tank, not so much ;-).
Pally Can tank or Heal. Ret is less optimal
Druids can Heal or Tank. And DPS, but not in the same league as their Heal and Tanking abilities.

All of this is When compared to equally geared alternatives played by equally skilled players.

For a heroic MGT run, would you take a boomkin over a mage? A ret pally over a rogue? An elemental shaman over a warlock? An enhancement Shammy over... welll pretty much everything else (I play an enh shammy, we are unloved in 5 mans qq ;-) )

Yes they can. But they don't do them near as well as 'specialists'.

Now would I take a druid tank or Pally over a war tank? At equal 'gear', it depends on the player.

Would I take a Resto Shammy, Holy Pally, Resto Druid over a Priest. Yes.

No one hybrid build SHOULD be as good as a specialist build. But a GOOD hybrid build should bring 80-90% of the DPS (if DPS) + greater utility. Or 90-100% of the tanking (aggro managemet + survivability) + something special (AoE tanking, Unbelievable Health).

Just my $0.02 worth.