Quotes from the D3 Dev AMA

[Roland]

You can believe what you want, but if you are melee, then w/o extensive use of the AH, you will be going nowhere past Act1 Inferno, if you are soloing.

If push comes to shove, you can always farm goblins.

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This quote from Wyatt was also excellent:

Alright so I'm going to take a stab at this question.

As mentioned in a different thread, the drop rates were carefully tuned for a single player playing through from 1 to 60 without ever using the AH.

All of our items are randomly generated, and so follow a distribution curve in power. Let's say for the sake of argument that you were to somehow distill an item down to it's "power level" and created a distribution graph of drop rate vs. power level. This graph would probably be normally distributed with outliers at high power levels dropping at a lower rate.

Looking at this graph, an average item drops every 5 minutes, a higher power item drops every 15 minutes, even higher power drops every hour. etc. As you move up the curve to ever more powerful items, the amount of time it takes to find such an item increases. This is what makes certain items more desirable, this is how things worked in D2.

What happens for a standard player who is playing solo when they first hit level 60 is they see an item upgrade every 30 minutes or so. Pretty quickly it becomes every hour, then every 2 hours. The higher the power level of your gear, the longer it takes to find your next upgrade, that's just the underlying math of this distribution. It's not really anything we set either. If we magically made all drops rates 10x higher, all it would do is shift the power curve left or right, it would not change the fundamental property that the higher up in power you go, the longer (statistically) it is going to take until you find your next drop.

So then let's say you visit the Auction House and get infusion of power that hurls you forward on that power curve. So whereas at one point your gear may be at a point that you are statistically speaking probably going to get an upgrade every 2 hours. After visiting the Auction House you hurl yourself forward on the power curve so far that now you are statistically going to get a drop every 8 hours.

To further illustrate the point, let's talk about the coming changes in 1.0.3. In 1.0.3 we're going to start dropping level 63 items in Act I of Inferno. We're also reducing incoming damage. What do I expect to happen? I expect that there will be a rapid increase in power across the entire community as all of these items become more widely accessible. It's like we took the distribution curve of items and made everything drop more. That item that used to take 10 hours to find is now a 2 hour item. An item that used to be a 2 day item is now an 8 hour item. After the initial frenzy of power increase, things are just going to settle again. People who think drop rates are too low now will probably still think drop rates are too low a week later when they move to the new point on the curve. I've spent a long time on this question so I'm going to move on but hopefully somebody who gets what I'm saying will be able to expand on it more, maybe draw some graphs to better illustrate the point.

tl;dr we could make drops 100x what they are now and it would just cause everybody to settle at a new equilibrium point. Anything you can farm in a few hours you'll already have, anything that takes longer you'll wish you could get faster.

I wish they would just start with the damage / health changes in Inferno and go from there, rather than exponentially increase the item drops in the first Act. I can farm enough gold to buy better gear in less time than it takes to find it in Act I, and although it would be nice if ALL gear in Act I was level 59-60 (instead of the 50-60 spread we have now), then 60-61 in Act II, 60-62 in Act II, and 60-63 in Act IV I'd be very happy. As it stands there's just too much useless junk in Act I Inferno, but I don't think sliding that scale all the way to the other end is the right answer. Give us slightly better drops, so our chances of finding that more worthwhile gear is improved, and gives us a bit more crafting material to work with so we can utilize the Blacksmith more. As it stands it takes days of farming to get enough gold & materials to make even 10 items. I'm not opposed to that entirely, but I'd happily trade the loss in gold from vendoring for slightly more crafting materials (which would bring gold income down, and increase the rate of gold sinks via crafting).

As others have said, Blizzard seems to only be capable of balancing with a sledgehammer. I really wish they'd take smaller steps in their changes. Already I can see the damage and health nerfs in Inferno will make my defensive gearing of my DH better, and maybe even allow me to take my first steps into Act II (whereas right now Act I is easy farm mode, and Act II is all but impossible). I guess some things never change, no matter how much personnel has.

Ah well. I'll enjoy 1.0.3 when it comes out. I just hope they don't muck things up too much. Some of us don't mind actually working for our rewards.