No it's not. Storing it as a flag requires creating a value to flip the flag bit in, and you'll need a flag bit for every piece of loot this applies to (a frequently growing list). That also provides you with no audit trail for when the item was acquired in the first place, making it hard for GMs to respond to support tickets about it without a secondary audit log being created somewhere.
You then need that value loaded for every player in every instance. You'll need to persist it back out every time someone wins an item. You'll need to communicate it to every client so that the client knows if they can hit need or not (when client/server communication load is already an issue). You'll need to know which bit corresponds to which item, so the item database will need a value to use to correlate those.
Meanwhile, a chat message is sent from one client, relayed to some others, persisted to logs for enforcement purposes, and promptly forgotten about. The server doesn't have to refer to it again, doesn't have to keep it in memory, and doesn't have to keep it in sync with the client.
Also, someone has to spend the time developing and testing that, as opposed to something players actually want.
No, it wasn't broken. It worked fine at what it was intended to do: support the etiquette that came about in MMOs over the years where someone on the job in question gets priority over someone who wants to gear an alt. That worked fine. There weren't tons of threads complaining about how bad it was (in fact ,there was none). It's still the default system in every other roulette in the game.That's not a fix. That's returning to a state that was broken for different reason. And there are many things that worked "pretty well" for all sorts of thing. Bikes worked pretty well for few centuries. Were our ancestors supposed to stay with bikes? Pretty sure you're glad they didn't, and invented cars, trains and the like.
If it's good enough for nearly the entire game, it doesn't sound very broken to me. Not to mention that your proposed fix is to put it back to how it was, except in a more complicated way. Your proposal lets people need again, exactly how it was before, except they can't do it twice, which was hardly a problem in the first place.
Meanwhile, this change has done something that almost never happens: get the community in multiple languages to agree on something in overwhelming numbers. SE decided to find a problem that didn't exist, fix it by reinventing the wheel, and apparently thought that wheels would work better if they were triangular and there was seven of them.