I see a lot of posts here that really do not understand how the item squish will work in relation to old content. If we want to overpower content the same way we do now something has to be changed, and people have tried to explain it but so many don't get it, so I will try to do it easily instead of using math or big words.
The way the item level grows now, is linear through leveling, and at each expansion level cap they grow massively. When they item squish they do NOT lower everything by a percentage (because that would mean that an item with 1 stamina after percentage squish has for example 0.4 stamina, and that is stupid and not what they are doing), they will make all ilvl growths linear so that it grows like it does when you are leveling, therefore it will be a small growth through all expansions. Do you know what that means? That vanilla will barely be touched at all, only squished between the raid tiers, and then keep growing a small amount through everything. Since no massive growths exist, it will keep growing little by little until MoP levels, and it stops at about 200 or something. Since vanilla will be almost untouched, and nerfed by only a measly few itemlevels, while MoP gear will be nerfed by more than 50%, this means that we will be 50% less effective vs low level raids.
And now, the counter argument to this goes along the lines off "But we will lower the % on old raid bosses by 50% also and everything will be dandy". Not really, because you see, level 60 players has barely been nerfed at all, they got nerfed by max 5-10%. So if old raids are nerfed by 50%, and level 60s only by a few %, those level 60s will massively overpower the raids that are for their level, and could maybe 10 or even 5 man them, who knows. Therein lies the problem, and another problem is that if a MoP enemy gets scaled down to be 50% weaker with the rest of the Panda ilvls, whos to say level 80 groups can't go around 5manning level 90 mobs when those mobs have been nerfed so much more than the 80 players have.
One solution was that higher levels get extra damage towards lower levels and vice versa to make up for the much much smaller difference in itemlevels.
Now, if someone still doesn't understand, please quote that part and I will try to explain better.
Tl;dr: Not everything will be nerfed by the same percentage, the higher your ilvl, the bigger nerf you take. Thus a level 85 with high end raiding cata gear should have a good shot against a 90 in greens because the ilvls are so close to eachother, imagine 476 geared vs a 522 geared for example.