I actually think horizontal progression of sorts could be achieved without drastic sweeping changes, and it's also worth noting that in combat gear switching is *not* part and parcel of this.

Rather than get blinded by how FFXI handled things, let's look a bit further back to the days of Everquest. The game was primarily horizontal progression with mild levels of verticality between expansions and tiers. The overall quality of gear was noticeably better in late tier raids such as Vex Thal when compared to old endgame content such as VP or recent but entry level content such as the first planes in PoP.

However, most endgame zones had a few pieces of 'Halo' gear, items that were unique enough or good enough to stand above other options even 4 or 5 expansions down the line. As a Shaman raiding up until the mid point of PoP, I was still utterly inseparable from my VP Robe and Snare spear and overall wore a variety of bits of gear from a content right across the game ( https://eq.magelo.com/profile/9093 ).

So, how can FFXIV pull this off? I'd go with a variant on Kisa's approach but roll it into a form of set bonuses. Let's say I have a full set of Sigma gear, consider having a set bonus that can be unlocked by wearing 2 pieces of gear depending on where the gear is from. PvP gear could unlock something like a cast time reduction on Stone. Crafted could unlock some extra VIT. Hunt gear could unlock a movement speed bonus. There's plenty of ways to add in flavour to this and it's simple enough to roll extra bonus stats in with the set bonus so that you're not destroying your main stats for the sake of these sorts of bonuses. When odd numbered patches come along with new gear, it's easy enough to bump up the bonuses slightly on the new stuff to give the raiders and min maxers a fresh carrot to chase.

Simple no?