The sad thing is, these people actually think this is a good idea.
To give some of these people the benefit of the doubt (On the surface, this idea sounds ok) I'm going to walk through an example of game balancing without nerfing.
For the ease of the example, I will use Ultima Online. Class balancing in Everquest is a bit more complex and I'd rather not be typing for an hour. For those of you not aware of UO, basically your 'adventuring' folks were all of one class: Tank mage. The difference being that, when developing the character, did you develop magic first then add swords, or swords first then add magic.
In the early days of Ultima Online, certain types of offensive spells had a damage bonus based on the type of armor being cast against. If you cast a Lightning bolt on someone in platemail it would do more damage than someone in leather (etc).
The problem was, Lightning bolts were killing or almost killing people in one blow. And Mages were running around completely naked (to keep from getting the extra damage) taking people out with one, sometimes two blasts.
Choice: Do you lower the damage of LBolt or lower/eliminate the armor bonus to spells?
Well, lets say we can't nerf.
So, we decide to balance this without nerfing. Bearing in mind that UO had no classes (completely skill based) and we can't just raise a classes hp, we decide to do what sounds logical. When someone wears armor they will get an HP bonus as well as an AC bonus. Sounds great, right?
Now warriors are able to easily take out monsters because they have these extra hit points. They are sweeping through dungeons. Mages, formerly naked, are now donning armor as well and sweeping through those dungeons.
Uh oh. Well, easily solved, we'll just give the creatures some extra hp. This will make for a little longer battles but to keep them within reason we'll also increase the creatures damage a little.
Now, we think we have it solved. Only now people aren't using spells much at all. Since monsters have added hit points, the spells aren't as effective against them. Since monsters hit harder. Spells are primarely used against other characters only, since that's the only time they are truely effective.
So, of course, we have to start raising the damage of spells.... (And hope we get it right, or we'll be doing the full circle again!).
END RESULT: We've spent a lot of programming time raising every thing in the game to offset an overpowered spell. Our goal, after this huge development task, is to "on average" make the original spell effect weaker. But since we couldn't just weaken it (nerf it), we had to raise everything about it, cause the game to go through huge imbalances, and get the final result.
WHAT DO THE PLAYERS GAIN BY THIS: Nothing. By raising everything else but the original overpowered spell (skill, ability, whatever), we have affectively "lowered" the power of that spell.
WHAT DO THE PLAYERS LOSE BY THIS: They lose a lot of development time that could have been concentrated on other game problems.
QUESTION:
Why do you people think this would be better? Instead of "nerfing" the DoTs, you would prefer they increase the damage of DD spells, and Melee combat by 20% and raise all MoB hit points by 20%? That'd make you happy?
(And I hear them whine, Just leave them alone! Oh great, now we want a static game. Why didn't we just by Might and Magic VII? You can be sure they won't make changes to that game over and over keeping it new and fresh. No, we'd prefer people to gradually choose Necromancers and Druids over all else so we can kite and life tap everything to death... Personally, I'd prefer that they keep putting new things into the game. And when something is not in balance, I'd prefer if they fix it. If I buy a broken game, I want a patch to fix the game...)
Anyway, on to the conclusion. Conclusion. People who wine that Verant should never nerf, why aren't you playing AC?

In summary, we either a. do nothing, b. directly fix the problem, or c. indirectly fix the problem, invariably costing us a lot more time and risking imbalancing other aspects of the game.
The 'mud wimping' article that's so popularly posted everywhere seems to advocate either a. or c. Your post illustrates the problems associated with c. quite effectively.
-Brad