I was in a guild in early vanilla where our guild leader frequently “accidentally” looted items to the wrong person. There was no way to fix this at the time. We’re pretty sure he sold them for gold or whatever.
Their proposed system is an improvement in my view. Sure, someone could get an item, then sell it. Kick them out of the guild then if you discover it. No matter what Blizzard does with loot, someone on one end of the system or the other will do something unethical with it.
Forced personal loot in modern WoW was probably largely part of Blizzard trying to finally solve all loot drama once and for all, but that was hated too.
They’ll never please everyone, but a short loot window in raids helps them on a customer service side while still maintaining the basics of classic looting.