My raid team runs exactly 10 people, with no bench, because we don't need the drama that benched players are likely to cause.
It's one thing for people to be benched and it's another for them to be understanding of it.
Rather than asking them to have to sit out some bosses, we simply never exceed 10, and we have now gathered a core of 8 people who are 100% consistent and reliable in performance and attendance. We therefore strive for 100% attendance, which is not hard when we raid two nights a week. We operate on a three strike system, where missing a raid night without warning is a strike and causing multiple wipes due to inattention or whatever is a strike. The other 2 spots were lost because the players reached 3 strikes and were dropped.
If somebody does have to miss for whatever reason, they let us know beforehand, and we DO pug in their spot.
If the pug is unsatisfactory, or is dragging us down, or causing wipes, we drop them and pug someone else. I find this to be fairly rare.
If loot drops that the pug can use, they roll on it, just like everyone else. They earned it as much as anyone else, and we congratulate them if they win.
Personally, I would rather give a piece of loot to a pug every other week than have gear diluted through a group of people that need to be rotated. For us, it is ideal to have 10 even, and pug anybody who can't make it.