Overall I'm very happy to see this. I can understand why some are opposed to it though.

The way I see it, it'll force us to use multiple different sets of gear on our way up to rank 50. With each new set of gear we equip, we can turn the old into materia and enhance it, if you choose to do so.

This also prevents exploitation of the spiritbond system (ie: cap spiritbond on multiple high rank pieces as you progress), assuming that higher rank equipment will yield materia superior to that of lower rank equipment.