Your Point 1 is moot. If Flex and LFR are both available for loots seperate from Normal/Heroic, then no matter what the ilvl is, some raiders missing that one piece will feel compelled to run it. With the cheap wow accounts to addition of Token uses for extra rolls, that will be higher, if they really need that one slot filled (depends on what drops for the spec from a particular boss).
It needs to be high enough to compel some people to try for it besides LFR. Where that needs to be compared to normal, not sure. But I think it should be at least 8 ilvls higher than LFR (so the dropped item basically amounts to a LFR item + 2 upgrades), or it won't mean anything. But at that point, I can see Raiders going "Now if I can't get a 522 in normal, I _have_ to run Flex so I have a shot at a 510" QQ...
Love your idea about scaling to less than 10 people, but it becomes problematic from a role stand point (Still require 2 tanks for swapping, or remove the mechanic below X threshold? Where does that put best wow gold things on a healer/dps ratio?), and the damage and health numbers start being extrapolated instead of interpolated between 10 and 25 numbers. Control (I think the buzz word is "balance") starts disappearing. Not something Blizzard would do lightly or without a lot of testing.
Agree we need better ways to find groups. With people no longer all in cities (by design), there are now 4 or more zones you need to have someone to get your message out to people. And the pre-LFR "tool" never has anything listed when I go look; it is dead.
Flex may not roll off the tongue, but it describes it perfectly. Maybe next xpac "flex" will be "normal" and "normal" will be "heroic" requiring 10 or 25, and "heroic" will be "challenge mode raid"
They did that with Heroic Scenarios... And it felt like Blizzard was actively pushing people away from LF-tool content. Blizzard hot-fixed that, to players enjoyment. Making same lockout for selling wow accounts LFR and Flex for loot, and only first one you run determines loot would be exactly the same thing.
And Blizzard needs those people to fill the LFR rosters to help the even more casuals along and keep queue times down. If that seems contradictory, think about queues in the dead times, like 3am on a Thursday or Friday, and how great that would be if all LFR queues worked like that.