This is nice in theory and I’m all for it, but you still run into ‘the selfish player’.
Quest items are global to the group. It’ll be a matter of whomever loots it first gets it. So even while grouping, you’ll suffer the inverse. Rather than losing tags and loot rights to ranged characters outside of your group, now ranged characters in the group will have the least chance of looting a quest item before everyone else. If the party is just a revolving door of players in the area, then there’s little cooperation if players just bounce out when their quest is done.
If a melee joins the party and is on top of each mob when it dies, and they take the quest item every time then says “Thanks for the group, I’m done. Bye” - It feeds back to that ranged character thinking ‘what was the benefit of me grouping with these people?’. Heck, I see this when I play with friends - Most people probably have that one guy in their social group who always tries to loot every mob or chest first.
Vanilla just has a general level of incompatibility with group play. It’s why we now have things like quest items duplicated for each member of the group and global tagging rights. People play nice when it’s in their benefit: when there’s more than enough mobs and the group kills faster with less down time or for safety in a contested zone. But an over-camped starter area doesn’t provide those upsides outside of general kill quests.