You are going to have vertical progression in any game with a level system, that's a fact and will never change (level systems by design are broken with current MMO design methodologies but that's a whole different discussion). So I personally don't see anything 'wrong' with scaling rewards along a progressive path in the format it's done in this game.

What I am a little interested in though is how SE plans on growing the game once a level cap hits. Will iLVL just keep scaling as it is now? We're only level 50 but we have what would effectively be a level 90's gear (assuming the scaling is linear). So what are we going to be using when we're actually 90?

Did FFXI do it this way with iLVL gear? Personally, I've felt that rarity tiers were a better way of dividing gear amongst a similar level, where each rarity/level combination only has so many stat points available for allocation meaning that the highest rarity for a level is the highest amount of stats someone in that level can attain. If more power is needed in such a system then either AAs (alternative advancement, a la EQ, EQ2 for example) or a level increase is required.

Personally I'm more a fan of the level increase method because then you're actually getting something for your work (in the form of new abilities and potentially new ways to play your character) as opposed to a comparatively boring statistical increase (a +5% DPS gain with the same skills is less fun to me than a +2% gain because you gained a new ability).