In a comment, Maybe offers the following reason on why the hardcore "deserve" epic loot:
However, if your guild is entering a new instance like BWL, and nobody in the guild has been there before, then that is a different story. My guild took 2 months to figure out how to down the first boss of BWL (even after reading all the strats online). That's 2 months of 40 people coming to the instance week after week knowing that they will probably wipe a bunch of times each night, getting no loot or gold in the process and having to spend their own gold on repairs (which can be quite substantial). That kind of dedication defines a "hardcore" player, and I think deserves epic rewards.
I disagree with the idea that a casual player would not be willing to come to wipe after wipe. I think that this is a common misconception on the part of the hardcore. In fact, a lot of casual players would be more willing to come to BWL than many so-called "raiders". You see this reflected in many posts on the WoW Raid & Dungeon forums. It's fairly common to see a post by a guild leader complaining that attendance for Blackwing Lair--with its many wipes and little loot--is much lower than attendance for Molten Core, which has few wipes and lots of loot.
Casual and hardcore are two ends of a spectrum. We all have elements of both casual and hardcore. Some people lean more towards one end or the other. In my view, the difference between a hardcore player and a casual player has to do with the process vs. reward outcome. A hardcore player aims for the "optimal" outcome regardless of the process, while a casual player will settle for a "good-enough" outcome if the process is interesting enough.
For example, take levelling. A hardcore player will try to get to 60 as fast as possible, even if it involves just grinding away on the same mob over and over. Grinding is the "optimal" way to get to 60. A casual player will quest, even if questing takes more time. Questing is "good-enough" for them because it is more interesting than grinding.
The same perspective carries over to gear. If a hardcore player decides that Blackhand Doomsaw is the "optimal" weapon, she will run Upper Blackrock Spire over and over, until she finally gets the Doomsaw. The casual player will probably acknowledge that the Doomsaw is the best weapon, but will be satisfied with his Bonecrusher. The Bonecrusher is "good-enough".
This also carries over to time spent in the game. The hardcore spend vast amounts of time, because that's necessary for the "optimal" outcome. Just look at the grind required to become Rank 14 in the PvP system. The casual player may spend one night a week playing WoW, because that's good enough for them. On that one night though, they'd be willing to come and wipe with the guild on Blackwing Lair.
Another example is Molten Core vs Zul'Gurub. A hardcore player is more likely to want to do MC, because the rewards are so great. A casual player would prefer to do ZG, because it's more interesting, even if the rewards are less powerful.
[Edit: I'm not sure the above paragraph is clear enough. I'm basing it on a personal experience. The guild I was in did a ZG run and an MC run each week, while learning each instance. The ZG run was stopped--even though people liked running ZG--in order to concentrate our efforts on mastering MC (ie multiple attempts, trash runs for materials for Fire Resistance gear, etc.). I do not think a casual guild would have made the same choice. I think they would have been more willing to accept slower progress in MC, but keep the ZG run as well. I don't think the decision to stop ZG was necessarily wrong (we did spawn Ragnaros in 3 weeks) but it was a "hardcore" decision.]
A casual player who is in a raid guild will come to Blackwing Lair wipes (maybe not every night of the week, but whenever they play). The process is interesting enough. A lot of hardcore players will also come, because the rewards are so great. The problem lies in getting the casual player to join the raiding guild. The rewards are great, but the process seems so much more of a hassle than non-raiding content.
A casual player is not less willing to raid (and wipe) than a hardcore player. However, a casual player is less willing to join a raiding guild than the hardcore player. This may seem like the same thing, but I think there is a subtle and important difference. In my opinion, Blizzard would be best served to cutting down the barriers that keep casual guilds from raiding.