They gave them some major gear upgrades so that they can feel like 'wow, I'm a badass - this stuff blows away the gear I saw those raiding guys walking around with a few weeks ago'. People were finally getting to the point where many realized they were NEVER gonna make it into BWL, much less Naxx, and starting to lose interest. That's mainly why all the gear in TBC was so overpowered compared to the original campaign. Everybody is left with just the game for the game's sake, which while arguably the way it 'should be' won't work for WoW because the game engine itself isn't the most interesting thing in the world.
If they took out the grind, the coveted 'status' that so many either love to maintain, or love to strive for, vanishes.
(and this is coming from someone who actually does play the game quite regularly). Here's the rub with games like WoW: they're largely a pissing contest where people like to gloat about how much better stats they have, how much better their gear is, how high their tradeskills are, etc. Yep, and they'd lose a lot of paying customers shortly afterwards. If Blizzard made the game actually *fun* to play almost all the time, then noone would see the incentive to pay someone else to get through the boring stuff! And voila, no gold-farmers, no hacking accounts, no Slashdot story.
