We run loot council in my guild. People who don't have good attendance and who frequently fail (extra dmg, missed interrupts, poor dps) get geared up last. Carrying some things over from the hijacked thread, there is a lot of animosity towards loot council. Some people seem to think that all councils are biased, but this is far from the truth.
On my loot council, we explain with reasoning whenever there is a conflict between who should get loot. We take into account performance (very important), attitude, effort, and attendance. If you doubt that officers don't pay attention to these things, then you are mistaken or have been in awful guilds. Although I'm just a LC member, and not an actual officer, I do keep track of attendance and understand how to evaluate the meters (class by class; fight by fight).
All of the people on the council all play different classes and roles (I myself play all the healing classes except shaman but I'm working on that as well as few tanking classes), so we understand stat priorities for all of the classes we raid with. If we're hesitant about how well we know these priorities, we check EJ or simply ask the player. For extra credibility, we're all very good players (not tooting my own horn) and understand intimately how all of the stats work.
To say that the members of our LC are uninformed about any aspect of the game is a mistake, we know what's going on. We know who is grinding the BiS arch trinkets, we know who can pick up their dps, we know who can't jump out of the goddamn lava for their lives. We're all intimately involved in this game and our guild (I honestly can't say I haven't personally talked to anyone on our raiding roster). We're friends with everyone, there are no cliques that run LC, and we know what the hell is going on in our raids. LC is the only way to distribute loot fairly to those that actually earn it. There are no arbitrary numbers; there are just people who want to see the guild progress and will do anything to help us in doing so.