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I think Blizzard's gradated dumbing down of content is for the most part an effective way of achieving several of the OP's objectives. The elite with world-firsts are known and revered amongst those who care about such things by tackling bugged end-bosses with fast respawns and such. Lesser guilds get their kills in over time as bugs are fixed and nerfs are implemented. Eventually, attunements are removed, gear-checks are reduced, fights are made more forgiving -- to the point where alts and fresh players can tackle them.
25-mans converted to 5-mans just wouldn't feel right in terms of mechanics and community. Adding NPCs to some fights is novel and acceptable, but to virtually every fight would get dull quick. Reducing requirements for multi-tank and mass cc fights would shatter the core essence of those fights. Assuming Blizzard put aside the considerable time to tweak 25 -> 5 man mechanics for the sake of saving on artwork, why not spend a bit of extra time and dump selected bosses into new 5-man and rework some of their skills from the ground up? It would then become new content for everyone, not just non-raiders.
As for rewards, there are many options already for fresh players to begin. Why discount PvP in this model? It is a part of the game, and a simple system to participate in for anyone with time to play the game. Skill is not a necessity, but certainly ramps up the rate at which such rewards can be acquired. The badges system is one addition I greatly approve of. It helps to numb some of the pain from stupidity like getting 12 Kiss of the Shards vs. 0 Wraith Blades, and provides a reliable way to gear fresh toons.
To sum it up, Blizzard has done a decent job of tending to customer demand for most of the base issues the OP wanted to tackle. Could they do it better? Yes, but as he mentioned, that would take resources one way or the other. Given the option, those resources are better spent making new content for everyone.
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