I think the reason why they stick with ridiculously low drop rates is basically they don’t make content as fast as other P2P MMOs and so the bandaid solution is to just make you grind on it for much longer.
There's an element of truth to this, but also other MMOs are much more heavily time gated. We've experimented with this and I think it's fair to say that our players have rejected it - there's an expectation in Runescape that content is something you can grind as much as you want whenever you want, not something you do once per week. Given that people are rinsing the bosses 5-10 (or more) times an hour in some cases just indefinitely, a 10% drop rate would leave us with every item being valueless. (I mentioned this a bit in the recent RSGuy interview.)
I have some thoughts about how we can fix this as personally I agree that the drop rates are too low and the current system is unsustainable, but it's too early to talk about what they are for now.