It does. I did the Green Fire quest undergeared, and I am throwing myself at those challenges undergeared. That said: This time it's much less mechanics and much more numbers compared to the former - so it's harder to make up for bad gear.
Also: After having tried them a few times now, I won't put more resources into the Mage tower for a while, and I am relatively certain that a lot of other people will do the same. There's no point in trying to get the MT up if not for the appearance imo; in that case the alternatives are just better.
I'd like to see (for example) a Disc Priest doing the challenge with <890 gear. It just seems really unlikely with how much damage the abilities deal to you.