I mean ultimately I don't agree that's the problem but even if it is that should come as no surprise to you. The PROBLEM is that their is no alternative to raiding past a certain item lvl. All this need for difficulties would disappear in pretty short order if the developers simple offered other content that rewarded as well as raiding. Then you could have all kinds of niche raiding and actually have it be niche and nobody would give a fuck. In fact nobody gave a fuck by and large in cataclysm where they did increase the raiding difficulty dramatically. As the developers note those people basically just moved on to the other content that rewarded them as well. EXACTLY what should have happened and should have continued to happen. It would mean lots of changes to raiding though. Fewer extremely challenging bosses, little or no loot you couldn't get outside the raid, couldn't be used to tell a story, and a host of other changes.
As for the name yes it's a problem. It's optics and whether or not you can understand why somebody who only plays flex and lfr would be insulted that they aren't even good enough for normal is irellevant. The name ought to change to reflect what NORMAL means for this games population. Otherwise it's just a fucking joke.