Of course it's not perfect and nobody is claiming it is. It's simply the best quantitative value there is.
Qualitative is always the best. The way WoW Heroes lists the gear, tier/dungeon, gems, and enchants is very well organized and that too should be a quick look for any good raid leader. If a 2H melee player is sitting below 263 hit rating and I see a grip of STR gems I am going to be quite leery of that toon even if the gs is higher than another.
Always best to group with someone and see for yourself. But can't do that when pugging.
Just like when you go to apply for a car loan. Your credit score will determine the loan and interest. Maybe you ran into a bad medical situation a few years ago and the most responsible thing to do was let go of a credit card rather than lose your house. It may seem unfair but when working in that kind of business you see that poor credit "second chance" buyers are immensely more likely to default on a loan.
Same with GS. A raid with low gear scores is simply more likely to fail. In addition, good players are far more likely to have better gear than to have poor gear. They know what their toon needs and know how to get it. Plus when you see a lot of ToTC 25 and Ony 25 stuff, it's clear the player knows the fight. WoW Heroes has those nice icons.
That goes beyond just purely looking at GS, but the GS is a threshold. If you're 2100 GS then don't send tells looking to pug in for a 25-man Ony.
And it is easy to get a gear score very high. As long as you can equip the item the score is reached, even if the item is not valid for your spec or class, as long as you can equip it you can get the "score" for it.
Try to pull that and you're likely to get booted and locked into their instance.