I understand how instancing works and that there is a lot more than just the player but the server populations mean a whole lot in how many people are using the resources and doing events that require instancing. If there were 4-5k people during primetime there is much more likely to be people generating instances that would increase server lag. But there aren't that many people. Most servers are near 1k and a few are 2k during peak hours. Yes, that's not "empty" but it's far below what it use to be. By all means they should be far under their specced load capacity. When Nyzul isle came out we had over 100 people in the zone before you started having a lot of issues(limited to 6 people per instance, that's over 16 instances, per game server). Even if you were to allow soloers it's not likely to get over 16 at any one time as it is. The best, cheapest solution has already been suggested though and it's a great idea. Just limit the number of instances just like old BCNM fights. That way people can still do the content without a huge hassle(I mean they do it anyway already by circumventing the system limitations). And the hard cap will prevent issues from happening. Just put the cap at 10 instances and you'll never have to worry about it. It will very rarely limit people, quite unlike the current situation where people are farming for alex daily and need help getting in.
But yeah... It's quite obvious they don't care to use the subscription fees to improve the game. They just use it to make up for the losses of all their other poor decisions and let the game limp along.