I like the idea, but REALLY think we need a way to reroll or overwrite. If things are permanent, it's very anti-grouping because people aren't going to want to pass loot ever unless it's something none of their characters will EVER use. Not only is that bad for raids it's bad for normal grouping too, very newbie-unfriendly. Also it's just going to suck up more storage space when that's already a serious problem. People are going to loot tons more named gear to throw in the bank to curse later, blech.
The challenge quests (or whatever they are) are already the farming aspect of this sytem, no need to make it more complicated/annoying and then double that. I'm assuming these quests aren't 3 min zergs? And/or the cards aren't 100% each completion?
Either way, a mildly efforty reroll system would make the system way more interesting. Doesn't have to be FREE, but definitely not something insane like the gem of many facets. Give us something to do with the zillion siberys dragonshards, or I'd be fine with 500 mysterious remnants or something. Like i said, it shouldn't be overly cumbersome because getting the cards from the extreme challenges is the grindy part.