I will say you aren’t wrong that it artificially adds content, but you also have to consider the environment it was developed in. This was the groundbreaking “world wide 7 billion players” game, and if everyone could get everything then why bother playing online? Splitting up players in this way encouraged people to go online and find people to play with who had other IDs.
That said, the only reason to keep it is nostalgia for the reasons you mentioned. It would never go away on this server, but I could see a different/new server doing something like that. Create a unified drop table for rares, but do still let each ID specialize in their non-rare items like Skyly and swords. The biggest problem is that nostalgia is (honestly) probably the biggest reason we play, so who would even go to that server?