DISCLAIMER: This is not a pro-mudflation post.
=====================================That's my opinion after playing GW2 for last several months since beta (2x lvl 80s - Ele and Guard and a few sub-80 alts) and after playing GW1 considerably since launch (champion of the gods, gwamm and phoenix).
I think cosmetic rewards worked for GW1 beause the primary focus on GW was multiple formats of PvP with "looking good" as the secondary aspect of the game to fill the downtime. Many players collected skins while completing other PvE objectives like getting GWAMM, filling up HoM etc. Also, we need to keep in mind that concept of cosmetic only reward came in to being after factions was launched. With no increase in level cap and no significant powercreep (with the exception of assassin splits in GvG), there was really no need to introduce armor sets with different stats.
But, in GW2, the concept of cosmetic reward has been introduced during the launch itself. It may be an insinuation of the community but, that notion is prevalent and still makes me struggle a bit to fathom the reasoning of the introduction of the higher stat ascended gear in the game. I wonder if the devs are regretting because they allowed this "cosmetic only" concept to become a widespread notion in the community during the development without nipping it in the bud. Maybe they were afraid that they would lose a solid differentiator, something that sets GW2 apart from the other MMOs. Hence, they allowed that to continue.
As the game is new, it can't offer as many objectives that another established game can offer. Hence, some portion of the community feels that the game lacks content. I think, in other MMOs, gear grind is a huge endgame content, if not the only one. And that grind feels like content to the playerbase because the gear that you attain is actually better in overall number, and not only in looks. To divert people from that mindset, it'd require ANET to move GW2 in a completely different direction if most of the rewards in the game remain cosmetic only.
And, that direction should be not RNG driven pseudo-content. It should not be Korean MMO: ANET Edition. Maybe that direction should be emphasized focus in content that has more human element, more human interaction. Here are some thoughts:
Open Arena non-instanced Fights - Spars, duels etc. Would you not like to see two players duking it out in a colleseum in Orr? Would you like to bet on the outcome of that fight for a chance to make some money? Would you like to prepare yourself for such duels instead of being a sideliner in the future and earn portion of the collected bets as reward for winning the bout? This can also be a decent money sink instead of forcing players to spend attrocious amount of gold to obtain the looks of cultural armors.
World vs. World Competitions - How about rewarding the guilds that make the most impact in defending their own lands or lay waste of the enemies in the enemy territories during monthly seasons? How about making more guild objective raids or rewarding the guilds with tangible cosmetic rewards or temporary boons to the guild members?
World Bosses - How about adding random events where multiple of the current world bosses spawn adding more challenge to the inhabitants of the world to tackle. If the inhabitants prevail, reward them appropriately with something that can be used to attain their futire goals.
There can be many such ideas, practical or impractical. But, the real notion behind all these is to let the community feel that they are spending time in the world and adding value to their account - not playing for the sake of fun only. I know, everyone play for the fun.. for sometime. But, without clear attainable objectives, motivation dries out. Adding gear treadmill can alleviate the problem temporarily but, in the long term content wins over pseudo-content. Real useful rewards win over cosmetic only rewards.
These are my thoughts. What are yours?
tl;dr: Provide interesting objectives that motivate players to do something. If you are looking at gear treadmill, you are looking at the wrong direction. That's my opinion.