I always distract the pat for stuff like SP, when those lobsters are passing by and the tank or puller is being a moron with when to pull and wasting our time.
Or when a pull doesnt go right and a patrol is headed our way [i run out of battle and distract the pat before they get into aggro range. Saved my group from many wipes.
Distract is awesomely useful with stealth. When going in mines, through bunches of mobs wether in an instance or the world outside [in wow i mean]
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It's can be used in PvP as well, but to a lesser extent.
Ya it doesnt work on players in combat. BUT freaking them out is fun when their just standign around. Or using it to turn round players running away. Cause making someone running away suddenly run at YOU, is hilarious.
And making mounted PVP'ers run off cliffs with a distract is so full of win!