Blizzard unveiled their latest scheme for loot in 5.2, Thunderforged gear:
Each 5.2 raid boss will have a chance of dropping this new designation of a particular item that’s 6 item levels higher than their counterparts. These higher quality versions will be called “Thunderforged”. This means that there will be five variations of some items. You’ll now see a 5.2 raid item of LFR quality at item level 502, the same item in Normal quality at item level 522, the item in Normal Thunderforged quality at item level 528, the Heroic version of the item at level 535, and the Heroic Thunderforged version of the item at level 541....
We’re going to try having Thunderforged items drop more frequently in 25-player raids. They’ll be somewhat rare in both cases compared to the standard versions that’ll drop, but they’ll be even rarer in 10s. Overall, a 25-player group will be more likely to end up with a slightly higher item level after several weeks of raiding.
Basically, Blizzard is introducing rare pieces of loot that are about half a tier higher than regular loot. They will drop in both 10 and 25-man raids, but will have a higher drop chance in 25s.
The way I see it is that Blizzard has two objectives here. First, they want to make the path to Best-in-Slot (BiS) a lot longer and a lot more work than it was previously. Normal BiS should be relatively easy to get, minus one or two pieces that never drop, like paladin healing weapons. But getting Thunderforged BiS will be very unlikely, so you'll be working on it until the next raid tier. However, the gap between Normal BiS and Thunderforged BiS should be small, so not having Thunderforged BiS should not be that big a deal.
(This is roughly analogous to Magic: the Gathering introducing Mythic Rares a few years ago. The higher rarity made it a lot harder to collect a full set.)
The second objective is to encourage people to do 25s. But here Blizzard runs into a contradiction. Thunderforged BiS cannot be good enough to make significant difference to the raid. If it is a large difference, an unlucky guild will have a lot of issues, and there will be loot drama, and lots of strife. It will end up like Legendaries in previous expansions once again.
But the items also have to seem to be good enough that the mere possibility of a higher drop rate is enough to get people to sign up for 25s. Don't forget that the drop rate has to scale for the larger raid size. If a 10-man has a 10% chance of getting a Thunderforged item, the 25-man needs a 25% chance before the extra bonus kicks in. Then the expected amount of Thunderforged items per person will be equal.
I am not sure this is enough. The move to 10s was driven by guild leaders and officers, and I'm not sure that they will see a higher drop rate as enough to make up for the extra work. Sure, this change will probably encourage some regular raiders to apply to 25s, but they would not have extra work in either case.
As well, as I've mentioned before, raiders do not handle randomness well. A higher drop rate on a rare item will seem pretty rare anyways, and I'm not sure that simply increasing the drop rate would be enough.
To actually convince officers to shift back to 25s, you would have to guarantee the Thunderforged item, not simply play the odds. If each 25-man boss guaranteed that one Thunderforged item would drop, I think that would be enough to steady 25-mans.
But that's a fairly high expected value for something Blizzard is positioning as a "rare" item. However, without the guarantee, officers will weigh the chance of extra loot against the extra work of 25s, and find it lacking.
In conclusion, Blizzard will succeed on one of their aims, increasing the work and time required to obtain a true BiS set. But this gambit will fail to stop the bleeding of 25-man raiding.