Q: Since the EXP difference between Recruit and BM is small, why is it such a noticeable difference when you are in a WZ?
A: Better main/sec stats (I.E. in the GRAND scheme of things main/sec stats DO matter in PvP).
You forgot RATING, that is a HUGE part of disparity between gear. Also, BM/WH provides a SET BONUS recruit does not. Also, Expertise has a very Different Hard/soft cap then most other stats (that secret formula you were babbling about is in front of you nose).
edit: oh and Pre 1.2 you werent sitting at 700 EXP