I think you're a little confused about what the new system allows. You are no longer stuck wearing a specific armor to get something that is best in slot. Instead, you can take the mods out of that new purple armor you just got, and place them in whichever corresponding orange gear you like the look of the best.
It's not an appearance tab per se, but some of us like what Bioware is proposing better than the system other games use. It's definitely a step in the right direction when it comes to customization.
Yeah, I'd much rather have this mod system than an appearance tab. It actually provides something to work for instead of simply grabbing a random green you got, dropping it in a tab and being done with it.
As for Georg's quote that does help with some of my concerns if ALL epic gear(including greens that you RE'd up to epic) is fully moddable, essentially making it orange. That provides a much larger pool of potential gear to use when 1.2 comes out instead of the very few orange crafted sets.