You'll have no argument from me, Dog.
Granted, I haven't played Reach in a while, nor H3 for that matter, but I still hear a lot about the ongoings in Reach. Like you said, the problem is the Credits. That system seems like a wonderful idea in theory, but in practice it made a lot of players lose focus of the game itself. There came to be too much emphasis on having the "cool" gear.
Actually, when you think about it, it became like life: all about the acquisition of better things. And that's just wrong in so many ways.
Sadly, the majority of the players who fell into this trap are kids. Kids are impressionable and believe that looking cool makes them cool, and this belief is perpetuated amongst their peers and players in the same age group. And while the notion of our appearances matching our skill is attractive, it's also elitest, and I think speaks to why the Waypoint armor unlocks were so (my apologies to anyone who actually likes the CQB or Military Police permutations) sad.
Personally, I would want items in the armory unlocked by attaining medals and commendations. Different permutations should be unlocked by earning medals and commendations that have to do with the core concept of a permutation (example: EOD unlocked by earning X amount of kills with explosives, and Recon unlocked by earning X amount of Assassination medals, and so on).
I'm with you in the hope that 343i doesn't repeat this mistake in H4/5/6.