I don't think you're looking at this objectively. You seem to be looking at it through the lens of somebody who's upset to be losing some amount of power while gaining ten levels. A reasonable concern, but that's just how ratings work. You need to be looking at it in terms of whether it's maintaining the consistency of the overall system given some average gear level.
Actually, what upset me is more the excessive power inflation that seems out of control and ruins a lot of the immersion in the game (and even, often, the mechanisms themselves), and the fact that each of these "gear reset" are too excessive and make the entirety of the previous part of the game completely obsolete (to the point that it's counter-productive to run Strat/Scholo/BRS at lvl 58-59, and better to get greens in the Outlands).
The falloff was *not* appropriate with the increase in item level from 60 to 70. A max-level blue item was ilvl 60 (maybe 65) in pre-TBC, and ilvl 115 in TBC. That's at least a 75% increase in power, or as much as 90% given how many high-tier dungeon blues were even worse than ilvl 60. Meanwhile, the conversion rate only increased by 57%. Per point of item budget given to a rating stat, you're getting a better deal in TBC than in pre-TBC. An item with, say, 2% crit at level 60 had 28 crit rating. That same item in TBC has approximately 52 crit rating, and it's giving a level 70 player 2.4% crit.
Now, we don't know exactly what ilvl a max-level blue in WotLK is going to be. I'm going to try to extrapolate a little bit: A WotLK level 70 blue is ilvl 130. A random level 75 blue is around ilvl 171. Taking the difference and adding it to ilvl 171 gives us ilvl 212. That's probably pretty close to what a level 80 blue will be; it's 84% higher than a max-level TBC blue, and about 250% higher than a level 60 blue.
Now, suppose rating conversions had increased by only 57% again, so that it takes 22.1*1.57 = 34.7 crit rating per 1% crit. That level 60 item referenced earlier, with 28 crit rating, now has 98 crit rating; it's giving us 2.8% critical strike chance at 80, quite a bit higher than the 2% crit it was giving us. This trend doesn't work out.
Excuse me, but you're reinforcing my point instead of disproving it :
"The problem is in the extreme inflation in gear level, not the conversions.
It's not that the rating haven't sunken fast enough, it's just that the items were too powerful (although I'd like to point you that you compare the ilevel of an epic item to the ilevel of a rare item in one case, and two epics in the other).
And the same seems to be the case in WotLK, with insane increase of power, but at the same time insane lowering of the ratings effects.
Wouldn't it be more subtle, efficient and believable to have less steep curve in the rating downgrade, but at the same time a less steep curve in the ilvl upgrade ?
EDIT: Also, they're not really following a more pronounced inflation level in Wrath, it appears to be roughly the same deal. And ironically, ratings were introduced precisely to prevent the loot system from exploding from gear inflation, so your point suffers there.
There is twice as much loss of efficiency between lvl 70 and lvl 80 than between lvl 60 and lvl 70. It's clearly steeper.
And I don't see how my point suffer, on the contrary : why fight inflation by changing the whole game system, if it's to keep with increasing this same inflaiton ?
Just make less ilvl increase. Start with blue ilvl 110-115 at lvl 70 (so they are on-par with previous max instances, not phasing them completely out of the game, at least for the alts coming thereafter), and only increase up to ilvl 150-160 blue for ilvl 80 five-men instances.
Meaning that T7 would be about ilvl 165-170 epics, just a bit above Sunwell. All's good, there is still progression, and you have avoided overinflation. WHY the need to jump into the stratosphere with ilvl 200 epics as first-tier raid gear ? This just scream about putting big numbers without a reason, and increasing the inflation problem.
If violence doesn't solve your problem...
... you simply haven't been violent enough !