Is visual progression important?

As you said, this is a subjective problem. What looks good to you might look like trash to others. Intrepid chose to have a sub+cosmetics monetization method and designed the game around that, so it'd be too late to change that at this point. Oh, and they'd have to delete all the previous cosmetics too, which would just lead to a class action lawsuit against them.

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Again though, how exactly would they control that in any way? They can't really control what people like. They claim that in-game stuff will look as good as shop stuff, if not better, but ultimately the players will decide what they like more.

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Lore-wise there doesn't supposed to be any visual progression because we're preestablished people who're just moving into a new location. We're not just noname peasants getting born here.

Players could always just shit on anyone who has a store-bought cosmetic instead of an earned one. It's toxic as hell and wouldn't really change anything, but it might deter some people from wearing them.

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They could implement some kind of indicator on the player's nameplate (that's gonna be the "inspection" alternative), but I feel like they won't exactly because of the things I mentioned. The toxicity would be way higher than if players had to know which cosmetics were store-bought.