The problem with this is kill trading. Almost every server now has zero queue time. All you need is for two groups to meet up, kill and trade. Rinse and repeat. Even a diminishing returns wouldn't be enough. Simply meet up once with a large group and do it until the DRs set in. Go naked to eliminate gear repair.
People will always exploit and people will always be reported. The loot right now is beyond horrible, so any improvement would be great. Discounting a solution to the loot problem because players are horrible at the game isn't good enough.