It is fair and you are not throwing imbalance in the game.

Well... maybe a 2,5% imbalance on the long run (the expected value for multiple d20 rolls is 10.5).

In my experience, Perception is one of the most used skills. Also, it is - more often than not - a passive skill (the GM asks for a Perception check). However, the mere asking for a check puts the players on their toes, and metagaming arises even unintentionally on a failure.

Adopting the rule M&M and 4th edition use by default is, in my opinion, an improvement in gameplay: it saves time and avoids metagame.
By letting players make Perception checks when they ask for, and using passive Perception for things that they may not be aware of you can speed up the game and preparation time (for example, you can decide beforehand if the party is surprised or not, according to the Stealth check of their foes).

As a GM, I'll usually go further and use passive Knowledge (whatever) for giving them instant information on the stranger phenomena or monsters that they may happen to encounter and a passive Sense Motive against bluffing NPCs. In both cases I keep the opportunity to let them roll if the player explicitly ask for.

Level 12 Analysis

Your AC is very low. At level 12, AC 18 is essentially a death sentence. I'm going to assume you have a source of Mage Armour from a party spellcaster, giving you an AC of 22, and a further Ring of Protection or Amulet of Natural Armour or Barkskin or something to up that by +2 to 24. 24 AC is still incredibly low.

The lowest attack bonus I found with a quick peruse of CR 12 monsters is +18, the secondary Bite of an Athach. That hits you on a roll of 6. The most common number I found was +23, which would hit you on a 2. I saw lots of +26, +28 and even a +33. Those all hit you on everything but a natural 1.

In other words, your AC is too low if anything targets you for you to survive. The DM will have to pull punches not to kill you.

Valiant Stand improves this. By not by enough. Enemies are still going to autohit you. Best case is +4 stat boosters on dex and wis, mage armour, nat armour/deflection bonuses, and valiant stand - 18 base, +4 from enhancement to stats, +4 armour, +2-+3 nat armour/def, +3 valiant stand = 32. That's a hit on a 9 from the lowest common attack bonus I found on CR 12 monsters.

Your Attack Bonus Is Pretty Decent, For a Monk. You have +16 to hit without Smite. With Amulet of Mighty Fists +2, that's +18ish to hit. With Belt of giant Strength +4 or Bull's Strength, that's +20 to hit. Everything that has AC that is supposed to be a defense has 26+, which is good - you hit most of the time. Power Attack and Flurry are counterbalanced by Valiant Stand, which you should be endeavouring to have always active by use of Stealth, which you don't have maxed out, uh, why? Popping up out of nowhere for a flatfooted smiting power attacking flurry should be your opening round action in every combat. Even your iteratives have a decent chance to hit, with this hit bonus. Only decent, though.

Your Damage Isn't Great. 1d10+1d4+5 (where is that errant +1 damage coming from?) averages out to 13 points of damage per strike. With Power Attack, that's 19 damage. With Smite, against evil or chaotic outsiders/dragons, you get /+18/, so 34 damage per strike, which is actually level 12-worthy. Too bad you get 3 total attacks per day with that damage. Sweeping Smite carries the Cha-to-hit bonus, but not the damage from the 'first hit'. It's kind of like a really terrible whirlwind attack that way.

Most of the time you'll be attacking for 19, on average. Some stuff is immune to bleed, or has DR/cold iron and good, etc, so it might be less. If you move, you only have one attack, so your first round barring stealth will nearly always be one attack at best. Rounds after that, you can flurry for four attacks, each which might hit for 19 damage.

So a max damage on an ideal round of around 34+19+19+19 damage, or 91 damage in 4 hits. That's not terrible. It relies on getting a full round action, though. It also relies on hitting with iteratives, DR of the kind you can get past, no miss chances etc. Most monsters at this level have at least 150hp, so you won't be winning in hp races. But you will be able to contribute a bit at least to the usual team of four on one beatdowns.

Your HP gets eaten in a round. With your AC, most CR9+ melee monsters are going to kill you to dead in a round. 11 Constitution on a melee combatant isn't a great idea, but then, you're a monk and need wis and and dex and str and also cha for being a paladin, so eh.

Your Saves are decent. They could be better, but they could also be worse. Most DCs seem to hover around DC 23 at this level, going up as high as 28 but also as low as 21. With your +11/+11/+13, you should have a 50% shot at most saving throws, and although fear and poison aren't exactly the most common life-threatening things to save against, it's still nice.

Power Level: Fighter.

This character can be relied upon to be roughly as good as an unoptimized fighter. The DM will have to pull some punches, and tough encounters (CR +2 or greater) will have a good chance of one-shotting this character by accident. In a party with Rogue or better power levels, this character will feel notably weaker than the rest of the group.

Note

Evaluating something without gear is hard, because at the lower end of the scale, gear can have more effect on your ultimate spread of numbers than the classes chosen. If your gear is random stuff, you will be weaker. If you plug it all into boosters for your FOUR necessary stats (dex, wis, str, cha), rings of deflection and other stuff that helps boost your melee stats to make you 'great' at that rather than 'mediocre to good', which includes buffs from friendly spellcasters, you will be stronger.

Note

This build is stronger at lower levels, where a handy Mage Armour plus your defensive stats can put you out of reach of opponents attack bonuses, and things are easier to hit and easier to kill. Level 12 is definitely where things are starting to go 'downhill', and they will likely get worse as enemy AC and AB increase and every enemy has flying or spells and abilities.

Note

The build has no movement capability other than skills-based climbing, swimming, jumping. I'm assuming again allied spellcasters will be patching that hole with buffs, especially since with the other gear i've assumed in your build you don't have the money to buy gear to get flight or teleport or whatnot.

Suggestions

Your main problem is that you're playing a monk. Without serious optimization, monks are very weak. You've done a bit of optimization here, and pushed it up to unoptimized fighter level, but fighter is still not great if you're planning to be in a party with casters. Or if you're fighting caster-style enemies like many demons are.

Most of the tricks I know to make melee characters more competitive are in 3.5e. I'm assuming there's no backward compatibility in your group. So that's all out the window.

Paladin isn't giving you much other than flavour, either. You've got a decent Flurry and Attack Bonus, but you're way too fragile to make good use of it, unless your enemies come in the 'always attack the guy using the full defense action with the tower shield' variety.

In this case, i'd recommend Summoner. Synthesist Summoner. It slices, it dices, it buffs, it has level appropriate abilities, natural attacks, the works. It is, in fact, so good that you could mix it with a Paladin dip and still be relatively awesome.

Evangelist lets you keep advancing as a Summoner while also adding a divine feel to the class. It's also the only prestige I can find that advances your eidolon aka living armour, so.

Other. than. that... there's a good rogue-based fear build, but I don't know how relevant that is to your concept.

I feel like there's some way, between Fighter archetypes and the Hungry Ghost Monk monk archetype, to create kama-wielder who reaps ki from his opponents and uses it to chain-stun them with a huge Wisdom and Dex, just whittles them away with flurries of weak, ki-reaping attacks and then spends the ki on stuns. There's too many damned archetypes though.

Even if you're taking summoner, it's kind of worth dipping monk as well. You have to be unarmoured to use your synthesism, so you could benefit from a high wisdom score to your AC. Not worth going Hungry Ghost, because the ki-drain only comes at level 5. Just a one, or at max 2-level dip. Probably after you have 1 or 3 levels of synth summoner.

Yeah I cannot find anything that is about punching people that isn't just a Fighter or Barbarian with a 2-hander sword that is any good. There's some rogue stuff that is nice, there's an alchemist archetype that gets sneak attack and would make a murderously effective hand to hand combatant with the mutagen and the buffs. But nothing based around jumping on things and punching people except synth summoner. Yeah. That's my advice.

Synthesist Summoner 20.

Optional; Monk 1.

Optional; Evangelist.