Stuck between a rock and a cannot launch additional instances message

Lately, I've been helping some friends out by running non-heroic instances with their alts. It's fairly easy to mix and match our characters so that we can complete a dungeon quickly and still have a good mix of classes that use different armor types. Most of my friends have two talent builds and one of them is usually a damage build. Thus when we do an alt run we avoid using any tanks and just have all the mains switch over to their dps build. This allows us to speed through the non-heroic instances at the cost of a rare death or two on a large pull. It's a good system especially if we get two paladins using divine storm and seal of light. However, we been having problems recently with creating instances and keep getting the dreaded "Cannot Create Additional Instances at this Time" message. Last night it took 15 minutes of knocking our head against an instance portal before we finally got one created for our group.

Most of the issues are being caused by the high number of people returning to World of Warcraft for the Ulduar patch. I understand that the concurrent users for the game are highly cyclical and peak around patch releases. However, it seems as if Blizzard is using this as an excuse to ignore the problem or simply roll out additional resources at a slower pace. There's also the possibility their key network people are involved in milestones for other projects at the moment. Whatever the root cause the problem has grown much worse this week and seems especially noticeable if you try to do anything, but a heroic Northend dungeon. I'm guessing that Blizzard has some sort of resource queue on the instance servers which gives priority to certain instances. This is a real pain at the moment since it seems to me that lower level characters doing non heroics are more vulnerable to being stuck outside an instance. Plus, if a non 80 is stuck outside an instance for more then three seconds it seems to send a whisper to everyone on the opposing faction.

I don't really mind a makeshift battle royales when there is a fighting chance of winning, but its almost always a massacre when running a non 80 group. The entrance for normal and heroic instances are shared and that means you often have mid level seventies in blues fighting against players in Naxx gear. It's not pretty, especially since the "Cannot Create Additional Instances" message means the victors will definitely be corpse camping the losers. I used to think if you had some patience this wasn't too bad an issue. You just wait until the higher level group finally gets into an instance then you rez. However, a couple of times I ran into situations where after rezzing my group still couldn't create an instance and then a new group of eighties appeared. It can be very frustrating and if you have any PUG players in your group they tend to leave. Also I've seen evidence of high level players creating an instance and leaving one person inside it so they farm honor from people who are stuck outside.

It's an ugly situation right now and there's a few things that could be done in the future to prevent the issue.

1) Create additional instance servers for the love of god.
How expensive could they be? I have a feeling its not a matter of cost, but simply that all of Blizzard's network engineers are involved in getting the new Battle.Net ready for Starcraft 2, Diablo 3, and the new MMO.

2) Design new dungeons with separate entrances for heroics and normals
It's doesn't require much additional effort and even a little distance between the two would prevent slaughters.

3) Improve the resource handling of instance servers
I'm not sure what sort of system is currently used by Blizzard. I hope they at least take into account how many people are in a the group that is trying to create an instance. A single level 80 trying to make money in a old world instance shouldn't have priority over a group of 70's trying to do a non-heroic nexus run.