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I like getting loot directly from the encounter I've finished, just like I like buying CDs and not downloading them. Certain things have a certain 'tactile' relationship between the actions we undertake and the rewards we get for those actions, and I like that.
I do recognise that there are problems with the loot system, and I'm not against some parts of the badge system. But for every few rewards that are presented as "here you go, good job, you've proved you killed him" I want to have some that tell me they come directly from the body of the creature I have just destroyed.
A way you could present this in game, and still have a badge-like system, might be like this:
Killing boss X yields a key. This key can then be used to open a chest the boss was guarding. The contents of that chest are determined by the person who opens it. So that we can distribute the rewards equitably and predictably, but at the same time we have retain the direct relationship between the boss and the loot.
I think we can do better than a badge system and yet still have loot that is distributed in a less frustrating way. The badge system is fine in parts, but adopted wholesale it would be a cop-out.
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