In the Dev Watercooler concerning item level inflation, Ghostcrawler states "If you look at the item level curves, you can see that most of the growth occurs at the maximum character levels for the various expansions." Now, I partially agree and disagree, with the caveat that disagreeing with GC carries a high risk of being wrong.
Here's the popular chart showing the rate of ilevel inflation so far:
Item level vs. character level. Brown = vanilla. Green = BC. Blue = LK. Red = Cat.
As you can see, there are upticks at the end of each expansion, caused by new content, but more problematic is the increased rate of inflation in recent expansions.
A problem I have with this chart is that it does not treat additional content at max-level as another form of progression. The upticks created by strict mathematical representation can be smoothed out by treating each tier of armor as a pseudo-level. I made my own graph, showing tier gear plotted this way, along with the ilevel of rares between tiers:
Item level vs. character level, tiers added.
Well, that doesn't look much different, but it does allow for two comparisons:
Highlighting the tier progression rate shows that ilevel inflation has been markedly present in tier gear in all expansions. Each also appears to be approximately equal in rate.
Notice also the huge jump between the end of Wrath of the Lich King and the beginning of Cataclysm. If I remember correctly, this was to prevent early Cata content from being cleared with late Wrath gear, as Naxx was cleared with Sunwell gear. I see the necessity in preventing that kind of ilevel dissonance, but I disagree with the scale of implementation.
I suggest that the increasing ilevel rate of Rares between tiers, old and current, be brought down substantially.
I suggest also that tagging the first Uncommon gear of a new expansion to a higher ilevel than the highest ilevel of the previous expansion's Epics unnecessarily contributes to inflation. Having no use for quest rewards for a level or two for the most progressed of characters might be awkward, but having no use for a quest reward is a commonly overlooked issue. Replacing purples with greens, however, was a common complaint. Another problem was that newer characters had a very high ilevel hurdle to jump going from ilevel 200 Wrath gear to ilevel 289+ Cata gear.
These two issues can be solved by instead tagging the first Rares as a equal or higher ilevel than the previous expansion, while scaling Uncommon gear back across the previous expansions tiers. This will allow players leveling directly through without raiding old content a smoother progression, while also allowing progressed characters a small amount of time to continue wearing Epic gear before replacing it with mostly Rares.
We still have the problem of the exponential rise of ilevels. We still need enough of an upgrade over the last ilevel to justify upgrading but not so much that we get a runaway inflation of numbers.
The current trend is about 5.1% increase after character level 60:
From there we can project this increase into patch 7.3 (A long, but not unreasonable time frame):
At patch 6.3 it's about 8 points shy of the predicted 600 ilevel, but it matches up fairly close to what's currently in the game. Nitpicking aside, it's indicative of the craziness to come.
Suppose we reduced the rate to 3%:
By the time we got to patch 7.3, we still wouldn't be where we're at now. The upgrades would also be to small to be effective.
If instead we had an item squish every new expansion down to 3% and allowed current content to rise at 5.1%, we get this:
Series 1 is current ilevels, Series 2 is an ilevel squish to 3% baseline, Series 3 is a 5.1% increase off that baseline through 5.3, Series 4 through 6.3, Series 5 through 7.3.
If an ilevel squish for old content were designed into each expansion, it would effectively cut the rate of inflation, while still benefiting from larger increases for current content. It's not a permanent solution, but it's good for about 6 years.