I think that that was slightly true in vanilla. But the thing is, it didn't actually work out that way.
"Hey, that guy has matching armor and it looks cool" was great and all, but it didn't really mean much after, say, the first raid. It was more a deal of "Wow, that guy must have been grinding that shit for months to complete that set" than "I wish I had a shiny dagger like that."
I really don't care about the colors of pixels, I didn't in vanilla and I don't now. I raided because I enjoyed raiding, I didn't raid because I wanted to feel 'special' with shiny purple pixels.
People who decided to raid typically did so because they wanted to raid, not because they wanted to grind out an armor set against 5-20 other players for months/years on end so that they could feel 'cool'. People who came in wanting the rewards typically quit soon after they realized how much work it would actually be, the ones who stayed were the ones who wanted to raid (or, you know, REALLY wanted that gear, lol).
Raiding for me was more about the community; it was fun to throw together 40 players and bum rush Molten Core. Ironically, my memory of what it felt like kind of feels comparable to LFR now... but don't tell anyone that, it might hurt their feelings. That said, I didn't push very far into super high end raiding in vanilla because the way gear progressed was a bit much for me. Each tier was substantially more exclusive than the last, and Ahn'qiraj never interested me much. Would have liked to see Naxx, but, well, I did get that wish in WotLK.
I definitely don't miss grinding trash for 4+ hours in Molten Core; it was the players who made it fun, not the content, and definitely not the relatively bland-looking loot with purple pixels for the text.