Sure you can. Most of the gear in leveling process is horrible anyway. You get very little power from them and most often in the later stages of leveling, the gear simply does not matter, especially if you do normal questing. Even Ion "Watcher" have talked about this and how little gear from lvl to lvl actually increases your power during leveling. Heirlooms work great together with dungeon leveling and lets you just sell 90% of all the items you get instantly.
I don't think gear has to be the big reward during leveling and i think that you can make the leveling experience alot of fun even with a full set of heirlooms.
You are right, that there is proberly something wrong if nobody dosent bother doing the leveling the old way, but people will still do it and still does, and it should not stop us from trying to improve the leveling experience in other ways.
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Well.... With a wide scaling, you could just ignore the Wrath shit! Great fix