AoE grinding definitely is not bunk. The exp comes hard and fast -- I was getting about 40-45k experience an hour at times, sometimes up to 50k if I was lucky (edited to add: in Azeroth in the 40s-50s, not Outlands) -- but I do agree I'd rather quest. I didn't AoE grind so much as use it to make things like grinding rep, farming mats, and completing those 'get me 15 of xx item' (when you have to contend with the drop rate) done faster. Like, it really helped when my husband (holy/disc priest) and I (frost mage with frost AoE spec) were grinding for runecloth and Argent Dawn rep in Western Plaguelands. We'd stay at Felstone Field, pick off the casters first, and then I'd ice barrier, mount, he would cast another shield on me, I'd round up 10 or so undead, dismount, wait for them to come and smack me in a circle, do a frost nova, blink, take another 3 steps, turn, blizzard, blizzard, cone of cold, frost nova, strafe away, blizzard, and basically they're pretty much all dead by this point. An arcane explosion at the end usually takes care of things.
The main things here are your spec, your timing, and the order in which you do things. You need a frost spec that is geared toward AoE grinding, taking talents like improved blizzard, improved frost nova, permafrost, and various other things that will help with your damage and help to keep them slow and in a tight group. This means that you NEVER take the frostbite talent if you ever want to do successful AoE.
This is a link to the guide I read on how to do AoE grinding, and by reading it and understanding it and trying to perfect the technique (dying quite a few times in doing so as well) I learned how to do it:
http://wow.allakhazam.com/db/class.html?wclass=7;mid=114658131743438810;num=31;page=1
I had to learn how many of certain mobs I can easily get, whether or not to use ice block, perfecting the timing of blizzards and the distance, etc. You need to not be afraid to die a few times while trying to get the whole sequence of things down pat.
Edited to add: I'm fire specced now at 70, and damn I miss being able to down a dozen guys without me losing any health. It's one of the most exhilarating things ever in a mage's life.