Problem with your argument is you're living in a fantasy world, either that or you are incredibly selfish. Raid content takes by and far the most time for Blizz to create, huge environments, more complicated bosses, multiple unique armor sets + weapons, etc. and no one was participating in it during vanilla. Blizzard gave us the stats years ago, by the time TBC came out only a few thousand people had cleared Naxx 40 man. So over the course of 6 months about 0.5% of the player base actually bothered to go through the raid they made. That is the definition of a waste of development resources.
It's ironic really, you moan on and on about how adding multiple difficulties dumbs down the game (which is factually untrue, all it does it make it harder) when the reality is those extra difficulties are the only reason they can justify spending so much time making the raids as good as they are. You seem to think that if there was still only 1 difficulty we'd be getting the same quality of raids we are now when anyone with half a brain can tell you they'd either stop making them completely or scale back the development so much that every raid was essentially Dragon Soul (90% reused assets with only a handful of bosses).
You're attributing correlation to causation where it doesn't exist - Vanilla WoW was popular but not because the raid model it had. It was popular because it was a super accessible game to get into where anyone regardless of age, time, experience, etc. could progress to level 60. It was less of a time commitment than the MMOs before it. The raid model didn't match that at all, it was super grindy and required a huge time commitment, which is why most people never saw that stuff.
My point still stands that I believe MMOs needs to have content that is hard to access, because without it it doesn't feel like a world. I never really cared that I couldn't access Naxx or any of the raids after that, since I heard about it and thought that maybe, some day, I would be able to see it. It didn't bother me that it didn't happen because as I mentioned before, the "everyone is the chosen one"-syndrome didn't exist as much back then and I was fine with being a mid-level player. Having several difficulty levels for every raid takes away from the immersion since you know basically everyone at max level already killed the big bad boss. That it was in LFR is irrelevant.
Vanilla WoW was popular because it actually was fun regardless of where you were in the leveling process or what you wanted to do. There was a playfulness in it that doesn't exist today where everything is about min-maxing (they even removed abilites that wasn't "necessary" a couple of months back).