The thing is though it really isn't even a fix. If they squish iLevel by 200, which is a pretty big number(everything up until Naxx in Wrath if they did it all at once), that would only bring current iLevels down to where they were at the beginning of Cataclysm. In other words at the end of the expack we will likely be back where we were at the beginning-middle of the this expack. In other words they will have to do a squish every expack and we will still eventually end up where we are now unless they completely remove all gear progression from old content. The "problem" is fundamental to how the game is designed.