It's not- it's in the first spin-off novel, The Siege, by Peter David.
OK, mea culpa time. I _thought_ this line was in the DS9 ep "Shakaar." However, when I saw this episode, I didn't catch anything as a B7 quote. I also didn't get around to seeing Horizon till some years later (caught the last five minutes the first time I saw it on TV. Taken on that alone, it's not an episode to inspire constant viewing, so much aquamarine and feathers). Then, somewhere down the line, I either read or was told this was used in DS9. Since I don't remember the source, I can't vouch for reliability. I'm not even sure if I was told it was in "Shakaar" or if I drew that conclusion on my own. I do know I've been meaning to see the episode ever since to check but I haven't seen it on TV (and I'm not wild about buying the videotape just to check, though I may get to that).
Um, no, it's in the Peter David book! (trust me, I have all the episodes, and I'm the one who originally brought that PD quote to people's attention by mentioning it in my review of the book in DWB...)