See how I dismissed your argument there?
Seriously though a server wide (as in not cross server) LFD tool would do nothing but quell the general chat LFG spam, and allow the content to be more accessible by people who only have a few hours to play per night. I fail to see how this is a bad thing, and cannot understand why it's not a good compromise.
The anti-LFD argument seems to be "IT KILLS COMMUNITY" either by A) grouping you with strangers or B) letting people run dungeons instead of leveling via content. In the case of A) if it was server locked you'd still have the community, and in the case of B) how does this affect you at all?