PVP Power is working. It just doesn't scale as good as raw stats.
Here's the thing:
-as Dotadoom stated, "you lose about 20% pvp power (which is around 15% more pvp damage) for much higher overall stats"
-those overall stats not only give you more damage, but also more armor, crit, mastery, haste etc...
IF pve armor was scaled down in pvp environments, only a limited ammount of pve items would have any use to players.
BUMP for the fix, tho. Altho I enjoy my 850k HP(buffed) UH DK, I know it's not intended.