They are squishing items by a specific percentage (6% of current, I believe), so they can squish all NPC health and damage by the same number and things should stay the same.
The only problem is that some boss abilities are not linked to the boss - i.e. Garrosh throwing Iron Stars and whatnot, so it would be very easy for Blizzard to miss some mechanics in their squish. It's likely you'll have to deal with multiple bugged old content fights where certain mechanics weren't nerfed until they get fixed later on.
Though, if enough people run all the old content on the beta, then they can hopefully fix it all in time for release? People don't generally run old content on the beta though.
Also,
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