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You should never participate in an event that you don't have fun doing. You will not get the bag from this event. You will be much happier when you stop expecting to get the rarest item. Every time a bag like this is put in an event people have unrealistic expectations about obtaining it and end up wanting to kill themselves. If you want a guaranteed 10x17 bag there is currently one available in Shy's Shop for 1000 Star Pieces. They aren't going to ruin the people who paid irl money for that by making a free bag from an event remotely obtainable.
I agree with some of these suggestions. We could use some more types of mundane craftable gear so we have more options for skill training. I don't believe this will suddenly make low level gear more desirable, however, so it will be just as hard to sell to other players as it is now. It would be reasonable for more of the NPCs to be graphically updated. Some of the enchants will still be just bad but I wouldn't mind seeing slightly better numbers on easily obtainable ones.
I have to disagree with a few of your premises. I consider Hard Mode Shadow Missions to be midgame content. Hard Mode Advanced Dungeons are much more difficult than Hard Mode Shadow Missions. You should not be expecting to solo Hard Mode Advanced Dungeons. I know lategame players who can't solo them. From my experience the Researcher at Poulnabrone is pretty good about telling you what dungeons you might be able to clear successfully. As for shops, I think new players would tend to avoid Dunbarton shops after realizing they can't afford anything in the player shops there. If you are trying to sell low level crafted gear, Tir Chonaill would be a better shop location, assuming you set your prices to what a new player can afford.
I think the item list for the auction needs to be revised. It would be nice to see some newer crafting materials or items like Eweca Orbs appear in the auction rotation. Changing the starting bids on existing items by itself won't suddenly make those items desirable.