Remember when epics were epic?
It wasn't that they were hard to get. It wasn't that they were rare. It was that they were clear, significant upgrades and they tended to last a while.
Now we have a dozen heroics which give badges with which we can buy better gear. We have multiple raids which could potentially give upgrades. The sizes of upgrades appear smaller, since they're not so clearly separated. There are differences of around 15 ilevels between different areas. This means you're going to see lots of upgrades. Any slot has a dozen different upgrades of varying size. The result is that upgrades are not major steps up, but more marginal. 180 DPS weapons to 200 to 220 to 230 to 250 and so on.
This has a good side: you can get better gear without needing extraordinary amounts of luck. You're not going to run ToC for six months and never see a weapon or tier piece. Maybe you won't get the drop you really wanted, but the odds aren't bad that you'll get something better in some slot.
The downside is that upgrades lose some of their thrill. It went from winning big now and then to constant small changes. There just isn't as much magic in that. It's a savings account which will eventually have a million dollars compared to winning the lottery. The first is the better idea for a life plan, but for a game? In a game I want thrills, however irrational they might be. It's a game after all, not life.
What is to be done? I'd wipe out every other ilevel jump, bumping the gear at that level up or down. The problem with this is that Blizzard has two concepts which oppose it: alternate progression and rewarding bigger groups. We can't bump the 5-man up a tier and we can't bump 10-man up to 25-man level. But we can't just knock 5-mans and 10-mans way down because there is meant to be alternative progression, to get somewhere even with smaller groups. The result is a lot of baby steps of gear.
What would I do? I'd knock away the "bigger groups automatically get better" philosophy. Is it harder to organize bigger groups? Sure. So what? It's also harder to get gems and consumables on low pop servers, but you don't see higher level drops for them. As a compromise, make larger raid sizes drop more gear, slightly past the ratio of 25/10 group sizes, so they are faster gear but not better. This way to gear up faster, you run more content but to gear up better, you do whichever size suits you best.
The goal isn't to make loot more rare but instead to make it more significant. We'd still see multiple ways to obtain loot, but the loot itself would be more clustered in quality. The overall effect would be to make the current tier of loot last longer, but when you do get to the next, it will be more significant. This would happen just as fast as currently, maybe even slightly faster (since the middle gear was moved up or down), it would appear as if there was less gear because the middle steps would be gone.
Personal Loot and Set Pieces
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