LOTRO has a great example of this, the wife and I play LOTRO and their use of solo/duo options is excellent. Rift is another example of great solo/duo options. Since these small group instances aren't really meant for the hardcore dungeoners and raiders, let us casual peeps have a slice of the pie too! Even if it means scaling down the rewards.
The lore/story in this game is by far the best out of any MMO, and my favorite since I first played Warcraft Orcs and Humans. But a lot of the best story elements are gated for heroic runs and raids. I want to strike down Lich King, not for the gear, but for the story element. I want to take out Deathwing, not for the gear, but knowing I did it. Same for Illidan.
So long story short, Blizzard, let the hardcore have Dungeons/Raids, and scale Scenarios for story elements and such. Just an idea really.