There are two streams of dungeons and raids in WoW - normal and heroic. Unfortunately there aren't really two streams at all. There is one stream, and it cuts through both of the difficulties. The expected progression in cataclysm is to level to 85, then do normal dungeons to gear up for heroics, heroics to gear up for normal raids, normal raids to gear up for heroic raids and then heroic raids.
Being a novice RTS player, when I got Starcraft 2 I decided to play through the campaign on Normal difficulty. It turned out Normal was pretty easy and I bumped it up to Hard fairly quickly. Now that I'm better at playing the game I've done most of the missions on Brutal difficulty - mostly because I want the achievements. I didn't, however, play Normal to practice for Hard, or Hard to practice for Brutal. I played Normal because I thought it was the right difficulty level for me. Then I played Hard because I thought it was the right difficulty for me, and I had more fun doing it.
The idea of having more than one difficulty level is a good one because it lets different players play at their own paces. If you want to play on Casual, you can do that. If you want to play on Brutal, you can do that. If you want to use cheat codes to be invincible, those are conveniently built into the game. You play how you want to play. Imagine if in order to play Normal you had to play through Casual to unlock it. For experienced RTS players, especially those with a background in the original Starcraft, this would make the game needlessly tedious.
Unfortunately this is the path of progression in WoW. Bosses on normal difficulty don't offer the challenge that top-end players are looking for. Forcing top end players to play through on this difficulty creates lots of negative outcomes.
First, it increases the shared sense in the community that WoW is just easy. After all, you make the best players do things that are in fact easy for them.
Second, it puts people will greatly different expectations in terms of skill, gear and efficiency in groups together through the dungeon finder. Even top end players have to run heroics to maximize their ability to get top-tier gear. These players create a lot of friction in the dungeon finder by having expectations of speed and efficiency that the other players on their run don't necessarily want to live up to.
Third, and I think most importantly, it drastically reduces the excitement of defeating bosses. Part of the excitement of beating a boss is getting to move on to the next new thing. When you've already been forced to run the instance on an easier difficulty, there is no next new thing - you are just repeating what you've done before. When we beat Al'ar it was exciting to go on to Void Reaver. When we beat Opera, it was exciting to unlock the back door, climb the stairs and face Curator. When we beat heroic Marrowgar, we got to go fight Lady Deathwhisper, who we had already killed a dozen times.
The solution to these problems is simple. Segregate the difficulties and allow people to choose which one they want to play based on how they want to play the game. Normal instances gear you up for normal raids, heroic instances gear you up for heroic raids - as simple as that. Make the heroic raid precisely one tier more powerful than the normal raid gear so that people who run the heroic don't have to gear up for the next heroic tier in the next normal tier.
Having difficulty settings is a good way to let people choose how they play the game, but a bad way to build in progression. If your way of playing the game is my tedious stepping stone then instead of giving us different choices, the difficulties are forcing us to step on each other's toes.