An example of horizontal progression currently used is the different jobs within the same role and the ability to switch between them. Each job requires time to be leveled up to max level before they can be used. For example: PLD, WAR and DRK can all be used to tank. Each job requires time to level up, and is stronger in different fights. WAR excels in dps, PLD in physical mitigation, DRK in magical mitigation. All can be viable tanks, but some are better in certain situations.
Similarly, you can have different items that have vastly different stats but ultimately serve the same role. There will be ones that are optimal for certain situations - this is the most common argument against it. For example, you could have 3 different shields with say 30VIT and 30STR and one additional stat. On top of those stats, one of the shields increases your damage, another has increased block and the last one reduces magic damage taken. People would work out that it is best to use shield A in fight X, shield B in fight Y and shield C in fight Z. But, all would suffice as a shield.
However, if one does not have the ability or time to obtain all the different items, the system would work out. The illusion of choice argument is only if you have access to all the different options so you can simply choose the best one.
What if you only had shield A and B but you were going to fight Z? Is shield A or B the 2nd best? There is probably an answer to that. But if there was no ilvl so you had 20 shields to choose from (only these exist in the game minus leveling phase), or you have a mixed system where there are say 3 shields to choose from per ilvl tier, the answer won't be clear. Perhaps a shield from the previous ilvl tier is better when you don't have shield C for fight Z (This actually happened to the bard body from WoD, an ilvl120 piece which was considered better than other ilvl130 pieces)
Perhaps the shields could suit different playstyles (I'm getting a bit too hopeful here) - you might gear yourself to deal a lot more damage and have 4.5 dps members in your 8 man party, but your mitigation will be low. Or you might go full mitigation and make it possible to solo tank in 8 man fights (or at least semi solo tank - skipping some tank swaps or tanking some of the adds meant for the 2nd tank).
Another example of horizontal progression, which is actually in the game is the current tier of crafting gear (ignoring specialisation...that is NOT horizontal progression but a restriction). Each class has a class specific set of gear that is the best you can get, but you cannot use it on another class. Additionally, there is a set of crafted + melded gear which can be used by any class, but is inferior in stats. You cannot obtain all the class specific gear within a reasonable amount of time (1 year), so you must choose. However, the crafted + melded gear is sufficient (this is key - otherwise it becomes a restriction like specialisation) for any craft (to my current knowledge it is), but it is difficult - you might need FC buffs, food, luck etc.