What should have happened is when they came up with the Enhancement Pass (many months ago) they should have also thought about how they were going to let players "reset" their characters. I'm assuming they actually did, but given what the "trees" look like they probably thought "we'll just reset the Enhancements, just like the MMOs where we saw these cool trees" and that was that. Either they didn't think about how much more complex the character creation process was in DDO or it wasn't a priority to give players a character reset process that was more relevant to DDO.
Whatever actually occurred those months ago when they first thought up the Enhancement Pass, that was the time to begin to develop a truly relevant reset process. What we are left with now are the choices we already have - maybe tweaked a bit if that can be done without breaking them.
A LR equal to the current number of levels of the character - or something like that - would probably be the best bet of the current choices. The problem is that LR is already broken for characters with 3 classes or something (I don't know the exact details). Unless they can both fix it and tweak it for the true number of levels needed by release time I don't see it as an option. A straight LR is certainly not "fair".
So the other option is TR. But you can't simply give players a straight TR - its not fair to force someone who might only have 1 character or 1 high level character to take that character back to low levels for who knows how long. That is why the Otto's stone is suggested (rather than a Bigby's which will not take a character high enough for people who currently have characters in Epic).
Yes, some characters will not need it and it will cost Turbine some sales, but it is the most fair of the options available.