There would be massive outrage.
People are flipping out over doing dailies for valor gear.
Disregarding the ilvl upgrade system, the suggestion of blue gear from raiding would infuriate people. Even if the ilvl and stats didn't change, just having blue text would cause them to enrage.
I can see the reasoning of restructuring, though. Greens from dungeons, greens/blues from heroics, blues in LFR, epics in normal.
Would be kind of neat if upgrading a blue item to max with valor upgraded it to epic quality.