This ability will not remove the Daze effect caused by running from mobs. However, this ability has been used to great effect against Hunters, Rogues, Paladins, and more who all have the ability to "daze" other players (especially against those whose use of it is critical to their strategy). Hand of Freedom will remove the effects of Player Daze, but is useless against Creature Daze.
In Warsong Gulch, when protecting the flag carrier, take note of the number of enemy priests or shaman around before casting Hand of Freedom. They can easily dispel it. Also, a level 70 mage can spellsteal it.
Patch 3.1.3 (2009-06-02): The base duration of this buff has been reduced from 10 seconds to 6 seconds.