there's no reason for most lfr participants to do it if it's too difficult for them and if the rewards aren't attractive enough. same reason you wouldn't do any difficulty higher than that if there was no gear upgrades for you. people don't do that shit for the challenge alone.
the typical lfr crowd don't care about challenge. they're there for story and loot and that's it. and story isn't good enough for people coming back so that leaves them with loot.
also i'm pretty sure lfr has existed for at least half of WoW's lifetime.