For the longest time I was against the idea, but now I agree with it. The cited reason for why they don't allow it is so players can recognise what armour other people are using in PvP. The thing is that, given the effectively infinite combinations of ornaments and shaders, you're never going to notice what someone has on mid-combat, outside of maybe a couple of Warlock chests. If they're using a Class Item, you don't know what perks they have on it just by looking at the player model.
That said, I think Rime-Coat looks great, I don't know why so many people think it's ugly. It's nothing like the typical Warlock dresses that usually garner hatred and the moving eye is sick IMO.
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The moving eye is really cool but the collar is overkill and the corset + hip armor makes it look like you have an obscenely fat -blam!-.
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Yeah, its true that when things start moving really fast its pretty hard to tell what exotic anyone else is using. Plus people just aren't that competitive in this game like that to begin with so its not like most players are even paying attention. Something still seems a little off about doing that though. Not sure what it is.
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That was just an excuse bungo lawyers told them to say, the real reason is money, less ornaments selling and this game relies on silver transactions to stay afloat. You do not need to know what exotics other guardians are using in non competitive playlists and the competitive ones already know to inspect the other team during the load screens anyway. Plus like others have said not hard to add an exotic armour icon to the before match screen that shows what exotic weapon they're carrying...