[Scrubosaur]

This is the way it was explained to me back in the day on my necromancer:

Specialization is a 10% mana reduction when it "procs". There is a 1% chance for it to "proc" per 10 points of specialization. This meant that at 60 there was a 23% chance that a spell in maxed specialization used 10% less mana. And then the other spells maxed at 50 which meant a 5% chance. It made enough of a difference to drop certain spells that weren't your specialization when soloing and if a druid said he spec'd evocation you knew he wouldn't be an efficient healer.

As far as fizzles vs specialization, I seem to remember early on that it made a huge difference. When Luclin came out they added some AA's that reduced the chance to fizzle which resulted in a nerf to specialization (and to spell/instruments skills in general). At that time I also played a bard so it was very noticeable that something had changed with skills due to all the "missed notes".