I keep seeing the sentiment that the new item upgrade feature is just a new means of gear progression. I do not see it this way. In fact, I'm seeing this feature as a total game-changer, and not necessarily in a good way. Here's what I'm seeing:
1) Encounters will now be tuned to a certain level of gear enhancement. For hard modes to remain hard, the bosses will need to be tuned to impossibility for starting raid gear to prevent them from becoming far, far too easy with upgraded at-level gear.
2) Gear drops will be far less exciting and/or necessary. Finally got that drop that you needed? Great! It will be an awesome upgrade in 3 weeks after you've upgraded it twice! For that matter, will guilds even allow looting based on future upgrades? Cue loot drama.
3) Yet another mechanism de-emphasizing raiding and over-emphasizing grinding outside of raid hours. Bosses don't drop the best gear; they now drop mediocre gear that becomes the best only through hours of grinding dailies, dungeons, and scenarios that you've already done dozens if not hundreds of times.
4) If anyone thinks that item upgrades aren't going to be scrutinized in the social game the way gems, enchants, and rep are, then you're in for a rude awakening. Cheers to another non-optional "option."
Unlike other games with gear-upgrade progression (TERA), WoW has a raiding culture that requires a non-hardcore raider to devote 9-12 hours per week to raiding progression. The trade-off was that you were rewarded with a chance at the best gear in the game. Now it rewards you with gear you can use to go grind out valor cap to upgrade it.
If you think Blizz is just going to allow tier after tier to be easily out-geared by upgrades, you should think again. What is "optional" now is what will be "mandatory" tomorrow for dps checks, healing checks, and raid-leader dedication benchmarks.
This is not a good thing.