This is the thing. Baseline content people are expected to do, especially grind, needs to be casual. You don't want to introduce frustration into people doing what is literally mandatory content (I.E. trials and dungeons.) When you start pushing for difficulty, eventually it starts making certain jobs miserable (currently casters and healers,) but eventually the drive for difficulty creates Deadwalk, a dungeon with 2 completely awful bosses, especially for what should be low-effort.
That is, the dungeons, and even trials, should be doable by someone who's tired, drunk, and just looking to unwind. If a drunk person can't handle the dungeon without dying, it is simply too hard for the literal floor of grindable instanced content.
However, you are correct. This game is polarized on difficulty to the point where people are begging for harder content because there's not much between dungeons and raids. Especially progression raiding related to give a sense of moving forward. There's a surprisingly simple solution to this though.
Take the dungeons we already have, and make hard modes of them. Not the ARR/HW/SB hard mode that may as well be a new dungeon, but actual hard modes. Make the rewards better than normal. Think 150 tomestones instead of 90 of the weekly cap. And also add a weekly reward: An item you can trade in for either a tomestone armor upgrade or a 'new' armor set. Stats are identical to savage, but take a little longer to get. If making 'new' armor, take old dungeon sets, make a dyeable version with a reskin. Add some fancy special particle effects. Make a unique-ish weapon (could also be dungeon weapons!) Make them fancy and unique to this midcore content.
Instead of dungeons all the time, take old trials. Instead of unreal mode, reimagine the fight. Similar or even same mechanics but in a different order or with different telegraphing. Hell, take unreal fights and just throw those into their own roulette. Add some sort of gatekeeping mechanic to make sure people are semi-skilled enough to get in, but otherwise can queue in with a roulette. Try to encourage roulettes as well.
And after doing all that, if this somehow kills off savage raiding, then the problem is in savage raiding. If glamour and challenge isn't good enough, then there's something wrong with the glamour and/or the challenge.
Midcore needs representation, it needs to be a good, fun way to gear. But it needs to be opt in and also have real rewards. And definitely not be anything like critereon dungeons which may as well be lite party ultimate. Tomestone gear with alliance upgrades just isn't good enough.
Difficulty scaling is extremely important in MMOs. It needs to be brainless and approachable at the low end, and extremely engaging at the high end. The devs have kneecapped themselves with EW and especially DT on dungeons. The low end is too hard, the high end is too frustrating (as of EW.) But the solution is to create hard bosses for hard dungeons, and then make the same bosses super casual for story mode.