Ah I think I know what you mean now - that progression would result in a modulation to the subdominant key. I thought you meant the entire cicle -
C G D A E B F# C#/Db Ab Eb Bb F - as a progression for an entire song! Which would sound a little unstable.
Yes the Dominant 7th chord is very common rather than just the dominant. I don't know much about blues, but the Dom. 7th chord has been a staple of Classical Harmony for centuries - so I wouldn't say it took it's roots solely from Blues.
Going back to the I VI IV V debate here is a list of songs off the top of my head that use it to a great extent
Stand By Me
Unchained Melody
I Will Always Love You
Every Breath You Take
Mandy
Goodbye My Lover (james Blunt)
King for a Day (Greenday)
Crocodile Rock (La Bit)
In My Secret Life & Alexandria Leaving (Leanord Cohen)
We Go Together from Grease (and several other songs from it too)
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