Elitist doesn't make a game profitable. You can make content HARD, but you can not make it impossible for some people to experience. Doing the later is bad game design.
Going back to WoW, before BC, almost all the raids were 40 man raids. They were hard for most 40 man guilds. Especially when they were just adding them. I was in many a guild, and unless the majority of the raid had at least some raid level gear or stock/strath gear and knew what they were doing then completing the raids was damn near impossible for some guilds. Not to mention to effort it took trying to get 40 people you knew and trusted to run a raid together all at the same time and could afford to be able to play the 3-6 hours it may take to complete a raid. For many people the logistics of even trying it was impossible for them. There were huge segments of the online population that were then unable to experience much of the late game content that Blizzard was providing. Which in turn hampered them in other ways. No raid gear? Well PVP is going to suck for you. They didn't even have PVP rewards in place when they first put in 40 man raid dungeons. There was literally nothing left for the average and overwhelming majority of the player base to do once reaching max level beyond stock/strath/LBRS/UBRS runs. Progression was completely stuck for many.
I was in one of those elitist guilds at the time though. Let me tell you it was annoying as hell. The amount of ass you had to kiss to get gear. Even using the DKPS or point system that the guild would come up with didn't mean squat. Especially if you just joined. A piece of gear drops on a raid you can use, but since just joined the guild you would have zero to little points to "bet" with. So the chances of you getting gear would literally take MONTHS of weekly raids. I knew many a player that had to wait full on 3 months of constant raiding before they got to own a single piece of raid gear. Then there was the real bullshit. I played a hunter and say for example a good melee weapon drops in the raid. I want it, can use it, and have the points to outbbid anyone. BUT the weapon is 2.0 dps better than what the current tank is using. So because the "tank" needs to be outfitted first, they get it for free. Not that the tank needs the extra 2.0 dps. That is the crap I used to see happen all the time. I'm not talking about a single isolated guild here. This was the crap that the original EQ had pulled way back in the day. It was junk game design then, and it's junk game design now.
Well, I never played WoW, and while there was a lot of the "keep the tank maximized" going on in my EQ days, what I really meant by elitist was socially elitist, meaning not that they would figure out that someone was 2% more DPS than you and drop you from the raid for him, but instead that they wanted you to be constantly "sending tells to guild members, getting to know them" blah blah blah. I say if your guild isn't full, and I want to raid, and I'm not a known douchebag on the server, and I can commit to your schedule, just fuckin invite me.
Now, as for giving the tank every minor upgrade, I did see that a lot, but remember I played on FV, the all tradeable server. In my guilds, some of them had official procedures that when you got an upgrade, you turned in your old gear for disbursement to someone else and some guilds people did it voluntarily, but either way, I firmly believe, based on 5 years experience on that server, in the all-tradeable concept. It worked and it did not cause people to not start new toons. In fact, the knowledge that I could start a new toon and, once I managed to reach high level, not have to spend 2 years raiding on it to get equipped helped keep me making more toons, otherwise I would not.
And I was never one to enjoy leaving a toon sitting there in the market, so I'd always sell cheap. Group gear that sold for 50k plat I'd sell for 10k to get it moving...if I managed to acquire spare raid gear, I probably kept for alts lol, otherwise I sold it at similarly reduced prices - 500k normal price I sold for 200k for example.
But remember, when I talk about "raid gear", that's either the lowest tier raid gear of the current expansion, or old expansion gear. Selling the current expansion's highest gear simply did not happen, except in shady back corner deals for millions of plat, they were NOT put on public display, probably because they didn't want to get caught by their guild. At any rate, those deals are insignificant to the greater game, tradeable gear keeps gear flowing to new guild members without them having to raid 3 months to get stuff, and it does NOT stop people from making new toons and continuing to subscribe, it in fact encourages people to make new toons.
One extra point on "keeping the tank maxxed". Sometimes that's a good policy, it can make the difference between your guild being able to beat an extra encounter or not. I mean, if by doing this your guild could raid 6 out of 7 high end raids, but if you don't, you will only be able to do 4 out of 7 for the next 6 weeks, that's 6 weeks X 2 raids = a lot of extra guild gear. Because a lot of high encounters have AE effects or adds that require the whole guild to be good geared but some of them are single non-AE encounters that focus on the tank.