A few reasons:
1) Once you have all your talent points to work with, a typical hemo build allows for an incredible amount of control over in 1v1. Once you pick up a number of key talents (Initiative, Dirty Deeds, Imp Gouge, Relentless Strikes) you can keep an opponent stun locked and have a bunch of tools at your disposal if things go haywire (Ghostly Strike, Prep) or you want to dish out a guaranteed blow (Cold Blood Eviscerate).
2) Due to its control, it's fairly viable with pre-raid BiS gear (e.g. Dal'Rends), especially given that harder to find a decent daggers before raiding than it is to find a good sword/mace before raiding. Once you pick up some harder hitting weapons and increase your attack power, you can really start hitting like a truck. I remember playing vanilla retail and having middle of the road raiding gear and being up to cut through my target's health in my opening sequence (CS>Hemo>Gouge>KS).
As I mentioned above, you probably need to be rocking decent gear, especially weapons, in order to not feeling like your throwing around a wet paper bag at your enemies. At 60, you won't out-DPS a combat build in a raid ever as hemo, but you trading the consistent DPS for the survivability of a build that invests in subtlety as well as the occasional burst DPS when Cold Blood is up.