I can't comment on PvP...
In PvE, I think it would certainly be doable, to have a Priest, with that team, although you may want to talk to the other healers, to get a take on how they might see it?
As for which spec--go with what you like--you can certainly go with either spec, particularly in that raid heal team. My own preference would be Disc, but that's just me, and only because I would be thinking it a good fit, with the Shaman. Not that Holy wouldn't work...but, you'd probably be spending a lot of time on Off-tank, and raid duties. Would the raid miss the Druid heals? Yes, I think so, but not an insurmountable loss, or, as you put it, not a "big downgrade", theoretically. The bigger question is, "Could the raid adjust?" I can't answer that, but, again, should be possible.
I'm kinda with Quin, on the reason(s) for you wanting to switch...gear conflicts shouldn't be a factor, so that leaves just the PvP part...and, I don't know why you're willing to level up another healer, and yet not keep the PvE healer you have...to me, that's the ideal answer to both your PvP concerns, and your raiding concerns...heck, it even gives you more flexibility to the PvE part.
Since it looks like your going to roll the Priest anyway, you'll no doubt be answering these questions, in the best way, anyway--by actually doing it!
-"Just like a buzzin' fly, I come into your life, I'll float away, like honey in the sun..."--Tim Buckley