The problem is that D&D was never designed to be a one-dimensional video game - it was a game designed to use both theater of the mind, and interpersonal dynamics. Power-creep was kept in check by the depth of the game.
However, you can't program in a deep immersion experience to an MMO because there isn't enough computing horsepower or bandwidth available to pull that off. So what fills the void is grinding, gear, and aspirations of uberness.
I agree with Teh_Troll that power-creep is bad. And wholeheartedly disagree that the game stagnates without newer, better gear every release. It seems to me that people were more happy, and DDO was in a growth mode when the cap was 20, and epic gear was difficult to get. it has almost bred player burn-out.
The simplest way to prevent stagnation is to provide more content and more diversity. But that would mean giving up on what appears to be a large group of MMO players: the mindless grindhounds. And it appears this is the group that dominates. And if they are going to dominate, then Turbine is going to react by giving them more stuff to grind for.
The situation is what it is. Taking a road less traveled often means walking it alone. That doesn't square well if you're looking to make a profit.
I personally prefer powerful stuff to be more rare, and the game needing a healthy PUG environment to be successful. But I appear to me in the minority.