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I personally think Badge loot, and loot in general has simply gone too far. I like it in concept, but Blizzard did badge loot in a way that rewarded under-achievers. Switching to a tiered badge system in WotLK with resolve a lot of this, but I think a refinement of the general WoW loot structure would be a better approach.
When the concept of Badge loot was introduced I saw it as a way to fill in the blanks in regards to itemization. By putting items such as librams, trinkets, and other off-tier items on a vendor would allow people to get upgrades that the rest of the raid didn't want to see. If the badge vendor was nothing but rare-spec gear that was taken off of boss loot tables I would be thrilled.
My rendition of a perfect loot system would be one that has a 1/4 chance of dropping an item you can use, and then a sunmote-esq system by which to convert the items to bridge armor types. The only difference between Rogue and Hunter itemization is one needs hit rating and the other (to a degree) intellect. There is no need for 2 seperate drops in this respect, the item should simply be a shell that is imbued with another item to denote it's armor type and give minor stat adjustments. Maybe even bring professions into play in regards to conversions or implement a money sink to handle it as Naxx T3 drops did.
The problem with loot in WoW is that it does very little to respec the overall archtype structuring of MMOs in regards to loot. This makes some bosses desirable for some classes, while creating a "who cares?" mentality for others, specially in regards to optional bosses. There is an abysmal lack of logic checks in WoW to prevent loot streakyness and it creates the majority of loot issues when combined with the seemingly random loot distribution method WoW uses.
There is a lot of ways that Blizzard could re-vamp loot distribute that would make a badge vendor pointless, but finding a happy medium, or using one system to complement the other, would be the ideal approach.
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