However you're not looking at it fully:
The Blood tree only increases the damage of Death Strike now and not Obliterate. Obliterate's main damage increases are only in Frost and you're not going deep enough in Frost to do anything to push it's damage up. Therefore not only will your Death Strikes hit harder for more damage then your obliterate, but the heal helps your healers maintain your health at a comfortable level. It's in no means amazing but it's still a decent heal through 20 seconds of your rotations.
No, people need to get it in their heads that Blizzard no longer wants you to use Obliterate in a blood rotation. They want you to focus with Death Strike, which gives you health, which in turn, is a key idea around the Blood tanking tree. It focuses on effective health and survival, and Death Strike belongs there better.
Obliterate belongs with Frost and Scourge Strike with Unholy.