Well, it's also worth noting that the presence of the auction house necessitated that drop rates for good stuff be depressed, as well, since the increased ease of trade means that the effective supply is higher. The effect of this, of course, is that the average player never sees the really good gear in the course of play - if you want good gear, you have to go buy it. Not only is the treasure hunting mechanic short-circuited, it's actually retarded by the presence of the AH -- most folks I know (myself included) quit playing D3 when they figured this out.
The other factor exacerbating this was the gear design in D3 - they drastically boiled down the potential combinations of gear by reducing the number of potential stats on items and baking everything relevant to the character's viability into the gear (rather than using a character progression path independent of gearing), so that while in other loot grinders a piece of loot may be useful but not perfect, in D3, there's basically "has everything I need" and "not useful at all". When you combine this binary gear usefulness with deflated drop rates, you end up with a situation in which most players feel that actually trying to play the game as a treasure hunt is an exercise in futility.
The other factor exacerbating this was the gear design in D3 - they drastically boiled down the potential combinations of gear by reducing the number of potential stats on items and baking everything relevant to the character's viability into the gear (rather than using a character progression path independent of gearing), so that while in other loot grinders a piece of loot may be useful but not perfect, in D3, there's basically "has everything I need" and "not useful at all". When you combine this binary gear usefulness with deflated drop rates, you end up with a situation in which most players feel that actually trying to play the game as a treasure hunt is an exercise in futility.