I imagine that that first month or two of people leveling to 70 is going to be pretty chaotic for raiding guilds.
I suspect that many large guilds will fracture into two unless the bonds are REALLY strong.
Were trying to discuss these things already to hopefully prevent this. Don't forget that while small you can still gain XP in a raid. So there isn't anything that says you can't still raid the 40mans as you level. You may even find that some of the encounters you couldn't do before might get a little easier.
As for loot I am certain that we will use an FFA system in the 5 man leveling instance which is the same thing we use for them today.
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Six Demon BagJack Burton: Hey, what more can a guy ask for?
Egg Shen: Oh, a six-demon bag!
Jack Burton: Terrific, a six-demon bag. Sensational. What's in it, Egg?
Egg Shen: Wind, fire, all that kind of thing!