your confusing handouts with with guaranteeing a reward after so much work. it's no different than the minimum wage for a job. you put in effort and you get paid for the effort. currently, you could run 10 dungeons and not get a single piece of loot. if you can at least buy the BASE piece of gear (notice i emphasized base because i'm not saying let people buy 226 gear for cheap), then you have a minimum reward guarantee.
also, this system doesn't just cater to people who run 1 dungeon and 3 lfr bosses a week. if you run more dungeons and do more bosses, you get valor faster. this system caters to all. the upgrade system only caters to people who actually get loot and thus not only makes people who only run that 1 dungeon a week feel bad, but also those who run 10 and can't get an item they want. it's about not pissing people off which is what the current system does. the last part of your statement is just hyperbole. you literally can't guarantee that a person you run with will 100% get the item they want. people have been running old raids for years for a mount drop and have yet to get it. i'm that way with one dragon soul mount. i literally just need the one for the achieve and i've been working on it for years.
you need to look past how you play the game. i agree with you 100% that people shouldn't get handouts. it devalues gear and makes it less rewarding. but gear also shouldn't be so scarce that people quit in frustration. anthem (which recently had it's remake update scrapped) suffered and died because of their loot scarcity among other things. warframe is dying because they give out too much loot and it now means basically nothing. there needs to be a balance.