Well I may be a curmudgeon but even I'd not suggest a server reset on flags!
But maybe there could be a flag for completion of the QUEST for each new tier and those flags could become achievements? If they are achievements that count in character advancement that would be an additional motive for people, even those flagged to enter a tier, to do the quests.
Also, to calm nerves, I certainly would not be for seeing any rapid radical changes. I'd say make VT now more in line with other zones: only Luclin drops them and she drops them 25-50% of the time. Then maybe slowly drop the percentage rate of drops over a year or two.