I'm confused by a lot of the things people are saying in this thread, so I'm just going to lay down some sick maths for you all.

At level 7, Oracle can do all of the following (Although I would say more like 8, I've heard people say that with animation canceling you can get off two heals during a lvl 1 edict, but I rarely pull this off).

Give an ally 100% magic resistance and heal him for 720hp for 210 mana. With purifying flame's cooldown, it will take ~3 seconds to do this and within 2.2 seconds, you can then proceed to...

Deal ~500 magic damage for another 210 mana. If another 360 damage would kill your target, that would only cost another 80 mana about 2.5 seconds later.

You can feasibly do all of this in a single 10 second encounter (In either order, so if you need to heal first you can follow up with damage, or you can deal the damage immediately then follow up with a heal), and it will cost you 500 mana, which is just a little bit less than how much mana you'll have with zero items at that level. If you manage to have arcane boots, then you'll also be able to get off your ulti and one additional purifying flame in addition to all this. So if say your carry gets initiated on, you can ulti and heal him so he can turn the fight, deal ~800 magic damage, then heal him up 720 hp afterwards before heading to the well to refill your mana, with just arcane boots.

What can dazzle accomplish with just arcane boots at level 7? He can give armor over time during the combat, save an ally with shallow grave (Who will have to retreat if they want a chance to live), and if you've maxed shadow wave, heal your allies for 280 twice, and slow an enemy. Situationally you may get off a huge physical damage nuke in there, if the enemy is surrounded by creeps or your ally is naga or meepo, but more likely you'll get off maybe one or two bounces off (I may be mistaken here, I am a terrible Dazzle). You can probably get off another heal afterwards for a total of 420. I can definitely see Dazzle being better in a teamfight situation, so there's that. This will cost you a little more than 500, so you could definitely have some mana to spare to stay around afterwards, so there's more staying power to him as well.

Now compare to Omniknight. He can provide his allies physical immunity for 6 seconds for 250 mana and a target magic immunity for 6 seconds for 50 mana, this will surely be enough to save an ally that is initiated on, and quite possibly turn the teamfight. If he starts by healing that target, he can heal him for 360 while dealing 360 to any enemies adjacent to his target for 160 mana. However, all this will cost 460 mana, and an omni at lvl 7 with arcane boots will have 360 mana. Which means that with comparable farm, he would have to choose between getting off a repel and two heals, or just his ulti and repel. The impact of these spells can't be denied, especially if the fight lasts longer than 10 seconds and the enemies are clumped around your ally for both heals, but omni undeniably needs more farm to be impactful, and even so is dependent on the positioning of your ally and enemies to deal damage.

So what we have is a heal who can consistently deal 500-860 magic damage to an enemy at range, and be able to heal more than 720 damage while providing situationally effective purges and magic resistance, a hero who can save an ally consistently, provide an armor advantage consistently, heal a smaller amount of 280 during the fight consistently, and deal physical damage very situationally. And finally a hero who can provide magic immunity consistently, and then either consistent physical immunity or a consistent 720 heal with a situational aoe 720 pure damage.

The situational damage is undeniable, but is situational and very dependent on the positioning of both your allies and enemies. Oracle doesn't have this dependency and yet still has comparable damage potential.