The only time any of that applies is in the beginning, the demand skyrockets creating high prices as players all get geared more product builds up on the AH creating lower prices. Basic supply and demand, also in all honesty once you hit epic and above you have the ability to take out another player in one rotation even if their weapons mythic. When you are running a t1 unique or even t2 celestial you spend your time in AA getting bent over a counter.
Gold Sinks are put in games to keep you playing the game longer not all of them are to balance the economy. While I don't care about the regrade costs as much and I can see your point but the prices can be adjusted ongoing to reflect the state of the game. I personally won't regrade past celestial because I don't play enough to have enough cash to do it 1k times and I play longer then most average people. At the rate I earned money on live 600g a day it would take 3 years to get into the end game gear. Respec costs shouldn't even be an issue. Spec being free doesn't alter anything.
Any time you have a situation where only 10% of the population are in a gear bracket you have an issue, like it or not call players like me whiners all you want but eventually you won't have us around to kill it's that simple. I have played hardcore games since their inception and one guaranteed constant thing you ALWAYS see happen is the hardcore few end up playing on a ghost server when they get their way. If you want to be one of a very very small population after a year then by all means allow the gear gaps to widen. I am saying if you take a proactive approach to working to make things progress well then the populations will stay.
1. Once you hit epic you'll have an easier time killing people that have low gear, obviously their weapon grade won't matter if they can't hit you, it's their armour that matters and when you get high grade armour, that epic of yours won't be that epic.
2. Gold sinks aren't just meant to keep you playing, they're essential to any economy, if gold sinks weren't a thing the coin would be devalued so much to the point where even arcane gear might cost you a pretty penny. Adjusting prices to reflect the state of the game isn't a good idea either, if you start low and keep increasing prices then newer players will complain over and over just like how they complain they can't find land because older players had a head start over them.
You're also exaggerating, even if you play longer than the average person, if you're not doing anything productive then obviously you won't have the gold to do anything, that's how progression works.
And sure I agree, respect costs being free would probably not change anything as their price is so low anyway.
3. This is a game design issue, the game is very heavy on RNG and there's not much ArcheRage could do. Sure they could tweak values of grading so pvp isn't an one-hit fest, but then you'd also have to tweak so many other values, like in PvE, etc.
(Which kind of contradicts your 2nd paragraph, if you don't want people to have high gear then why would you even lower regrade costs? Or maybe you think everyone having epic weapons would actually make it balanced? It wouldn't.)
You could also limit what grades people can get but you already have people with legendary weapons because they got lucky, do you think limiting grades would be a good idea? I don't. People would just gear up even faster and get bored of the game.
If the game you're playing is hardcore then it's pretty obvious the hardcore players would be the last ones to leave, the average player just isn't as hardcore as most would like to believe. (Also, hardcore players SHOULD be rewarded for being hardcore, I'd never play a game that doesn't respect the time I put into it.)