I completely agree, an important part of an MMO is individuality and with a limited selection with high end gear and the fact that colours has its limitations it make it hard for player to stand out from one another. There is no sense of uniqueness, not to say that I should be able to look absolutely unique but still not the same as 1 in every 5 players.

Maybe a nice distinguish between how gear will look on a male chars and different on a female chars. Sorry for the lack of ideas but its just a simple example.

Still to add to the OP, I warmly welcome that feature and can definitively see its usefulness.