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It really depends, I think, on what you consider "Karazhan gear" to *be*.
I'm currently wearing a whopping 4 pieces of gear that don't come from Kara or previous instances (BWL, crafted, heroics, etc).
Full Karazhan gear *is* competitive right up to the end of SSC/TK for a lot of classes. Yes, T5 is great, and I want it ... but I have the best cloak in the game pre-BT for my class, and competitive weapons, offhands, wands, trinkets, rings, etc, etc..
Rogues in full Karazhan gear aren't significantly (read: much/at all) behind a rogue with Magtheridon and Gruul loot. What are they going to gain? A belt, and T4 sidegrades to Nightbane/Netherspite/Chess loot. Possibly a sidegrade cloak and a sidegrade ring.
Same goes for hunters and dps warriors.
Casters who are tailors don't gain anything but access to another option for weapon & cloak from Gruul/Magtheridon.
Tanks do gain something -- T4 chest/shoulders/legs are slightly better than Kara drops, but not OMG better.
List goes on. If you take every single drop from Karazhan, and then add in Gruul's Lair ... you can easily handle everything through SSC and TK. You're not missing much from Hydross/Magtheridon. Bits and pieces, here and there -- it's just like full BWL gear can completely handle Twin Emps. Yes, the drops from AQ40 pre-TE helped gear you up, but a full BWL geared raid could handle it.
A full T4 geared raid can kill Vashj. Or at least that's the claim made over and over around here when talking about "what's the point of the instances atm?".
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