I believe time limits "work" on balancing casual and hardcore play, but I do not prefer it. I would like to see future dungeons with no time limit and have a Normal mode and a Heroic mode. In normal mode, the difficulty is moderately challenging, while the heroic mode would be very hard and requires a very skilled and well geared party.

As for gear, you could make (for example) a Templar's Falchion drop in normal mode, and have Templar's Falchion+1 drop in Heroic mode, having better stats than the original one. Some may or may not like that, but I would find it fun personally.