So, as long as we have a centralized trading system, where millions of players can trade with millions of players at an instant, you will always have an unrewarding system. Reduce the size of trading pools, increase the reward to players.
I believe your assertion fails here. Yes decreasing the trading pool will reduce how quickly people can gear up by trading. It won't make much of a difference though, and I believe this hurts casual players the most.
Think about this. We are still going to be gearing up along a gear curve. It seems like rolls will be tighter, there will be more diverse items, less random which are all good things. Still though, at some point upgrades will become far and few in between, and people will need to turn to trading if they hope to realistically continue gearing up. And you're still going to see the same outrageous prices. And once people start hitting that point, the same complaints are going to rise up. "I can't gear myself up. I can't sell anything." This is because gear is relative. The inclusion of the AH or not will not change that.
So, with Blizz adding in better itemization and legitimate ways for you to gear yourself up to a reasonable level, why not leave the AH in? Even if you think the AH will allow people to rapidly gear up, why not make modifications to it?
For example (I saw another poster use this example a while ago so I'm not being original here) If the AH fee was 100% no one would use it. That means that between the current 15% and 100%, there is some optimum fee % that would diminish use of the AH, while still allowing people to use it.
The biggest reason people will see the AH as a success is psychological. You're still going to be dealing with the same problems of your gear being worthless after the market has saturated, but you're not going to have a centralized marketplace to compare too.
My worry with the AH gone is that now I, as a casual player, have to go to an external site and do a good amount of research to figure out the market price of items I'm trying to buy so I don't get ripped off, as well as spending hoooooouurs in chat channels or trade games trying to find the specific item I'm looking for. Not fun imo.