I would be good with the following gear hierarchy...
From bottom to top:
1 - Trash dropped gear/vendor crap - Your gray/white items, your battered chain vambraces etc.
2 - Basic gear crafted by crafters (your green/blue) - Little to NO dropped yellow/blue gear other than grey basic crap so that all crafted gear is desirable and sellable. One of my favorite things about VG was that as an armorer i sold TONS of blue armor because people needed it and it was the best thing to gear up with.
3 - Special dropped pieces - occasional green/blue type stuff. Rare enough that normal people won't see more than a piece or maybe two through a normal progression in a level range/area/zone, ie grinding levels 10-15 through zone X would give the average person 1 or 2 pieces of the green/blue set of enchanted bronze plate that drops there on all the mobs randomly.
4 - Rare material crafted gear/Limited quest/named dropped gear (your yellow/orange stuff) - Stuff made with rare harvested materials by an expert crafter, or from camping a certain spawn for a specific item, or a special item that comes from a quest, like a special yellow 1h sword for fighters from a specific quest
5 - Ultra rare crafted gear/Very limited specific quests/nameds (your orange/basic purple stuff) - Stuff made by a master crafter with ultra rare materials (harvested, dropped, etc), very unique quests or real rare spawns/drop rates from nameds
6 - Raid gear/Raid crafted gear - Stuff from raids, and/or made from raid only crafting drops that require a master crafter who has found/earned/grinded faction to find/earn special recipes to use it. Stuff that is better but is so rare and difficult to get that it does not make the "regular" orange type crafted and dropped worthless because everyone just expects to get the level 6 stuff eventually. Aspirational items that people want but happily accept level 5 because level 6 is far from a given for anyone.
7 - Epic/Extraordinarily rare crafted - Epic quest line items, stuff that is crafted from extremely rare (not necessarily raid...raid and/or mega mega rare harvesting nodes, spawned/dropped items) materials that are made by a legendary crafter in specific conditions as described above...like a special recipe with special items made only in a certain forge on a certain day of the week/month or under certain conditions, weather etc. Your extreme status/power type items...Excalibur type items. Stuff that normal people will not expect to get, but should be attainable if you want to spend the 100 hours working on it kind of thing. The kind of thing you should only see a few of on a server.
Your normal person should be in almost all 1 plus a few pieces of 2 or 3 OR if they can or want to afford it, mainly 2, with some 3, and as they work up, working through to mostly all 2 with increasing amounts of 3-5, and end game working on trying for all 4/5 and the 6/7 that applies. My view at least...
Thoughts?