I understand what you are saying OP. However, I don't see how transmog is "damaging the game".
If people like popular transmog sets, then why not let them wear it? If people like farming random pieces of gear, then why stop them?
IMO, transmog actually had the opposite effect. It made people want to go back and farm old raids. It gives people something to do and a reason to revisit old content while waiting for new content.