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.
I've often seen responses from developers like the one above from those at Blizzard, justification for the decisions made. I also often wonder whether the developers themselves actually run the completed FP's/OP's with fellow employees or pug as it's expected from partcipants. If Jesse Sky believed HM LI should be completed in Tionese then he geared this flashpoint for the 1% of players who are capable. Everyone I know in game has completed HM LI in a minimum of Columi gear, and I am of the opinion that in this Flashpoint (as good and enjoyable as it was) the reward does not equal the effort. I hope that with future development the fact that reward equals effort is kept in mind for what was essentially a mini raid.