DCUO has a quite interesting take on dyes, although arguably one better suited for the superhero theme: each character chooses 3 colors. They are used across all his gear, guaranteeing by itself a mostly consistent color usage.
Those colors are most often used in each individual gear piece as the main color, a secondary color, and the highlight color, though the player can swap color channels on a per-piece basis. Each piece of gear might also have parts in a specific, non-changeable color.

GW2 is going for mostly the same system of three color channels per gear piece, except that each color will be unlocked just like a feat or quest reward, and that there will be no restriction on how many colors each character uses in his character. It will be almost as flexible as the Sims3 wardrobe color customization. GW2 is also using this kind of customization to create specific color schemes for each part of their world, reflecting it's culture.

I do agree, however, that to do dyes right each and every piece of gear that could be dyed would need new textures made. Unless Blizzard's art department has been internally doing this kind of work for a long time (which is not impossible, since it's an efficient way to quickly produce multiple color swaps for the same piece of gear), this would require Blizzard to either rework most of their old gear models, or to restrict dyes to just a few select pieces.

On the other hand, I pick a few variations of a specific color scheme on every game I play (dark green and dark blue as main colors, with golden highlights); all other things being similar, I prefer to play games where I can pick a color scheme I like. I see the fact I can readily do so on LotRO, DCUO, GW, CoH, etc, and not on WoW, as a negative point for WoW.

(BTW, I don't care that other players would be able to dress like dorks if we had dyes. If they want to do so, let them; they would have to make a big effort to look more mismatched than a player leveling in Outlands looks right now, anyway. And, for what is worth, over a fairly long time I've only seen a couple characters in bright pink, and they actually looked good.)