Yeah, I've commented on this BBS multiple times about that. ... she's a halfblood Betazoid, making her only an empath rather than a full telepath as the rest of the Betazoids are. Her other qualifications must be truly exceptional for Picard to pick her over a full telepath.
Picard probably should have used that argument to Satie in "The Drumhead" - my Betazoid is just an empath, yours is a telepath. Or the episode is confusing empaths and telepaths, since Sabin should have been able to read Tarses' mind, rather than just getting a feeling that he was hiding something.
http://www.chakoteya.net/NextGen/195.htm
PICARD: Admiral. I have to tell you, you must not expect me to permit any action against Mister Tarses solely on the basis of Betazoid intuition.
SATIE: Sabin has uncanny instincts. I've learned to trust them.
PICARD: I'm not happy about this use of a Betazoid.
SATIE: But you have a Betazoid counsellor. Surely you're aware of the advantages.
PICARD: There is a difference between a counsellor and an investigator.
SATIE: Are you saying you never use your counsellor during interrogations?
PICARD: Yes, I do, but I would not act solely on the basis of her instinct.