I talked with Jesse Sky (Lead Flashpoints and Operations Designer) about the difficulty of Lost Island and its rewards, and he shared his insight about these questions.
He mentioned that Lost Island is balanced very tightly for a group in Tionese-quality gear, but that because the boss mechanics are heavily execution-based, many players prefer to overgear for it. Small mistakes can easily wipe the group, so bringing Ops level gear is great insurance, even if it isn't required. The loot quality reflects this - players who take the risk of going in with Tionese and Columi gear will be rewarded. Players with Ops level gear are likely there for the Black Hole Commendations right now.
That's not to say that we won't be re-examining gear progression going forward. It just happened that when Lost Island was released (1.2), it made sense to us to offer new players and alternate route to the Rakata chest and Columi main hand while infusing the weekly Flashpoint missions with a bit more challenge for players who had geared past most Flashpoints.
Please tell Jesse Sky that while tight tuning and execution-based mechanics are all well and good, your game engine and/or its client/server communication system does a terrible job of making sure things happen the way a player might expect. L5 is the worst, when as the tank I try to move him so my group doesn't have to stand in stuff, he gets herky jerky on the screen, then doesn't move, then sets the group on fire because I wasn't in range to interrupt him. I've killed him before, several times, but this crap where it just stands there not casting or doing anything for long periods until he gets back to incinerate in his rotation is maddeningly aggravating.