By now, you've probably heard the story of how the guild Vicarious of Area 52 gave the legendary bow [Thori'dal, the Stars' Fury] to a rogue (who had been in the guild since the beginning) over two hunters (who had joined a couple months ago).
Like most respondents, I think that this was a bad decision. However, it's worth looking at why this is a bad decision.
To me, the sticking point is that the guild used Loot Council to distribute loot. I have said before that there are Two Views of Loot: Loot as Reward; and Loot as Investment.
Loot Council is almost pure Loot as Investment. The general idea is that because of the random nature of loot drops, a "fair" loot distribution system will have occasionally assign loot in a sub-optimal manner. So a trusted group of individuals directs the loot to the people who get the most use out of it. Loot Council essentially opts for a deliberately unfair distribution of loot in order to maximize the power of the raid. This is pure Investment, and is as far from Loot as Reward as it is possible to get.
The trouble with Vicarious' decision is that it was a Reward decision, not an Investment decision. And it was an entirely reasonable Reward decision. Yet their entire loot structure prioritizes Investment over Reward. If there had been another instance after Sunwell, Vicarious would have never given the bow to the rogue.
That's actually an interesting problem for Investment systems. What do you do when you no longer need to invest? Do you switch to a Reward system, or keep distributing as if you were Investing for a future instance. Of course, very few guilds have this problem, so it's mostly a non-issue.
I think it is a bad idea to build a guild around one model, and suddenly switch to the other model for one or two decisions. If you are Investment, make decisions based on Investment. If you are Reward, make decisions based on Reward.