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It's not all about equipment but depending on what you shoot (sporting group/division) it does create an unequal playing field.
For instance if I went to a USPSA shoot with my XD .45, leather IWB holster, and factory mag holder I'm at a disadvantage to someone shooting the same gun with a "speed holster" with the crazy mag holders positioned all around their bodies at weird angles.
Let me clarify and say I'm at a disadvantage if I'm shooting anything other than production class with my gun and gear. If I move into limited I think the rules open up quite a bit regarding equipment and placement of equipment. So I think USPSA solved that problem by implementing the Production division and establishing limits that are "normal" for beginning shooters.
From an individiual perspective I think the original idea is right, if I go drop 3000 on a custom 1911 my shooting might marginally improve. But as a whole the competitive nature of the sport is divided up among divisions so you get to pick your poison.
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