You are right about gear not being a valid way to measure someone's dps output. Several times we've been a dps short on a heroic and "pugged in" the last spot. I've seen some horridly skilled folks out there. Mages and rogues in full epics putting out only 500 dps. We usually get to just before the first boss and post the meters. "Sorry, bud your dps is just not sufficient. We're dropping you before you're saved." We've had some dpsers swear they can put out more, but it's not worth dragging someone through and letting them take gear and money for nothing in return. Many times we just ended up finishing up as a 4man team (or taking a completely undergeared guildee alt who can put out 800dps, so at least they get gear instead of some stranger who is an idiot and doesn't understand his character's class).

My big issue about the naxx run for my healer was that they wouldn't even let me go and prove myself on trash. I didn't even care if I got saved and they decided to remove me after a boss or two. Gear isn't everything. I've done so much healing on my priest and think I'm more than capable.