I understand item saturation is a problem, but I think it's more important to first solve the quality of the item hunt and the feelings one gets when legendaries drop and are identified. In Diablo 2, crappy Isenheart's pieces dropped all of the time, but they never pissed me off nearly as much as getting failed level 62/63 legendaries in Diablo 3. When a high level legendary drops, I want it to be good, just as runewords and high-level uniques were in Diablo 2.
I have no problems with a small percentage of legendaries having wider ranges, but this shouldn't be the norm. For example, in Diablo 2, Eschuta's Temper had wide ranges, but because it was only a sorceress-only item, and because it could be found a lot more frequently than ilevel 87 items, finding a good one was still doable and trading for a good one was not difficult.
So I wouldn't mind farming for multiple copies of a less common legendary to get a good roll, but I really don't want to be forced into finding dozens of copies of a very rare legendary. I am constantly infuriated at Diablo 3 for giving me crappy nat's cloaks and helms. The variance is simply too high. These items should have fixed stats and tight ranges.
The rarest items of all in the game should the lowest variance. If a level 70 Grandfather sword drops, it should be unbelievable. I should know it'll be awesome even before I identify it. There's nothing worse to find your first X legendary after 500 or 1000 hours and have it be garbage.
I also think the random modifier idea was taken too far in Diablo 3. Yes, it makes a legendary pool of items very diverse, but it also creates a lot more trash, and makes it far more disappointing when you farm up a crappy roll. I cannot stress enough to find maybe 3 or 4 nat's helms and have all of them be total garbage. When a very good roll can't even compete with a Mempo, I don't think it would have been unreasonable to tighten up this helmet, and that's just one of many examples.
If you want to have a diverse pool of items, instead of having 3 random modifiers on a single legendary, why not just have 5 or 10 different legendaries with fixed modifiers? It essentially accomplishes the same effect, but it avoids the whole "Feel bad" experience of getting useless random modifiers that junk up the item. You can have all these legendaries be reasonably useful for a variety of builds and purposes too, and since they would all be designed by your development team and not by the rng, they wouldn't be total garbage. Leave the arbitrariness to rare items - not legendaries!
The basic premise behind all of these suggestions is to avoid the whole "feel bad", frustrating and unrewarding experience that Diablo 3 is. Once you make the legendary hunt rewarding for players, then it's time to figure out how to deal the item saturation problems after. Game experience should be of paramount importance first.
I feel like Diablo 3 tried to deal with item saturation by creating garbage items for garbage sake, but because supply totally usurped demand anyway, item saturation on the AH became a huge problem. The AH became the place to find upgrades because too much garbage dropped in the game due to insanely high variances and garbage random modifiers.
Instead, why not give players a reason to destroy items - even good ones? The mystic is a step in the right direction for taking items out of the economy, but as I long said on the RTG podcast, why not have a variety of crafting components based on the quality of the item. People will want to craft some of the best items in the game, and they will have to destroy some very good items to get a crack at it. This will further sink gold and items out of the economy. Having just 1 rare and 1 legendary crafting component is too simple. There should have at least 10 in total, all being useful for crafting.
Anyway, keep up the good work. Let's hope you get it right this time Blizz!