I'm not necessarily saying that grinding is a good thing, but more that it goes hand-in-hand with a random loot system. Generally speaking, for a self-contained RPG like this, a hand-placed loot system might have been a much better idea (or even a hybrid system, with predominately hand-placed loot supplemented by "random" bonus items). But all things considered, a refit like that would likely take far more work than adding some respawning enemies or specific "grinding" areas to the game.
As it currently stands, it is entirely possible (and not even that uncommon) for a player to go large periods of time without ever seeing a drop that they can actually use. This can be mitigated somewhat by making sure that the party members each use different types of equipment, but even then there will always be some characters who are simply luckier than others when it comes to upgrading their equipment.
I've actually gotten close to Level 10 in some of my runs, with members of my group still being saddled with Level 2-3 items simply because I haven't stumbled over anything better - and every time I get a drop that I can't use on any of my party members, it comes with the disappointment of knowing that the source of that drop is gone forever (ie, the chest will never refill, the enemy will never respawn, the merchant's inventory is now 'set' at least for a time). That leaves me with little choice but to push onward and keep my fingers crossed that I'll eventually see something they can actually upgrade with. :P
