Blinding Rays is good mostly because it hits target encounter with agro and adds a bit extra with that Divine Debuff to the point where smaller AEs, heals, and other misc spells don't pull the entire encounter off you.
Incite is much more effective at single targets, however, and the hate continues to build, so for the most part that is the taunt you'll want to be depending on the most.
Bash is AMAZING for adding some extra agro in, especially in a jam.
Don't forget though that as a paladin you're not so bad off with your own DPS spells. Try to match the same % as the Fury's mana. If he/she's got more mana than you, well burn up extra on damage. For encounters of 3 or more, your 2 AEs are great for giving an even bigger agro buffer on the encounter as a whole, and work very well when directly following a Blinding Rays which debuffs the targets, giving your AEs a much better chance to land.
For the most part, your agro is due to your level. Necro/Conj is one of my least favorites to tank for (close in the running with Monks and Assassins.) If they don't know what they're doing their pets grab major agro, and their DoTs/Debuffs don't help at all either. The fact that hes got 7 levels over you effectively means hes also doin like 40-50% more damage than a 20 Necro would, which is 40-50% more agro.
Basically I doubt you're doing anything wrong, perhaps you should sneak on a few times when they're not playing and try to catch up.
As for the leveling thing, no in EQ2 everyone levels at the same speed (assuming you're talking about all being same level and have same Vitality) so I'm really guessing that your friends are playing without you some.
Pallys dont level slower per kill, the problem is but the necro and the fury can smack down mobs alot quicker than you, and since the downtime in this game is virtually non-existant that does mean that they can get solo experience alot faster than you can.
Anyways... Keep up the good fight. As long as you're doing everything you can to keep agro, you're doing your job! That necros just got a lot of punch in him, get up to his level and you'll see you got what it takes... trust me! =)