I used to play WOW long ago, and it had serious problems as a game, but raid encounters were light years beyond DDO. I remember the old Molten Core days - we needed 40 people to do the raid. 35 people was really pushing it, we really needed the extra 5 people. The great part was that the challenge was in the fights - everyone had to work together and work hard to win in those raids. DDO raids can be done with 1 or 2 people because the boss encounters are too short and too easy. It would be great to see a raid with multiple boss encounters (multiple bosses), and the encounters are truly epic battles, not kyting around to wait until a lever is pulled or a laser can be fired.
Probably now that the level cap in WoW is raised that particular raid can be done with fewer, but there are tons of raids with multiple boss encounters that require practice for full raid parties with top end gear to beat the boss in a straight forward battle (no levers).
From what I've seen in DDO I can understand why you would think it impossible, but if it can be done in WoW I think it can be done in DDO.
As far as the fact that I enjoyed the small raid groups - you are correct this won't help, but at least it would lead to challenging content, not challenging odds against getting a reward.