Needs to be alot more details about how this will work.
If its a smart system, that looks at if you are wearing a piece and decides not to give you another one of those pieces and someone else gets an epic piece that is great.
What it sounds like is, everyone gets a bag and depending on the boss loot table you have a chance to get 1 of the ~3 drops that you can use. As long as the items are tradeable within raid it could be ok but if not issues of double loot, people playing offspecs, ect.
Not to mention gearing will be so incredibly fast that content will be ripped through at an incredible rate.