Personally, I hate the Christmas Tree Effect. I guess I'm one of those huffy DMs. This whole Common-Uncommon-Rare fiasco* has shown me a better way (for my group, at least).
I've pretty much decided to always use Inherent Bonuses from here on out. I will still hand out some magical goodies, but now characters won't resemble oversized magical charm bracelets, and when they do find a magic sword or ring, it will feel special, and in fact, it will be special, probably of near- or at artifact level.
If you find a magical sword, it will be a Glamdring. If you get your grubby mitts on a bauble of some kind, it might not be The One Ring, but it will be named and will have history. I mean, this is the way I've always tried to do things, but inherent bonuses frees me from being forced to hand out junk magic all the time just to allow the characters numbers to keep up with expectations.
I came to this conclusion gradually, but not lightly. I know some gamers like dime-a-dozen magic, but my group tends to prefer it the other way. These things should not feel cheap, nor should they be commodities to be bought and sold on the open market in my campaigns. Doing it this way, or rather, continuing to do so after the advent of 4e and all its structured bonuses and expectations Makes Sense, since we're mostly old grognards anyway.
* it should be noted that I do agree with the rarity system, for the most part.