You are without a doubt being CPU Bottlenecked.
Phenom II X4 965
4300, 4 cores. WoW uses mainly one.
4300/4=1075 per core
My old CPU was a huge problem for me. 100+ FPS Questing, 1 FPS in 25 man raids.
Athlon 64 X2 4200+
1280, 2 cores. WoW uses one.
1280/2=640 per core
Your Processor is not even twice as good as my old Athlon 64x2 for WoW., I went down to single digits with that old thing. Don't bother looking at other possible causes, I'd bet you a processor upgrade itself that that is what is causing your low FPS in large fights.
Want to test it yourself? Ok. What ELSE could possibly cause it?
RAM? Check the Task Manager to see if you ever go over your limit, and are forced to use the Page File.
GPU? Get a monitoring program, and when you get the FPS drop look at your GPU and CPU Usage. If your CPU Usage on one core
is at 100%, and your GPU is low, then it is undeniable.
If you had a better CPU, I'd say it could have possibly been your GPU, but even then that's unlikely. With my 2600K and GTX 550 Ti, I rarely go below 60 FPS but sometimes in big fights, like LFR, World Bosses, and cities I go a little below. In certain small fights like Murozond in End Time, I found that it was extremely heavy on Particle effects, so while I could do LFR with Particles on High, this fight required me to turn them down a bit to prevent low FPS, because one of his spells used a ton