Considering how many houses that we can already get (both inside and outside of the crown shop - and many of the crown shop houses for gold, even!), I don't really see why the Watchtower Hall should have its requirements reduced.
I mean, sure, it needs a ton of reagents of rare kinds - but after gardening has been introduced, you can get a lot of those by farming pink dandelions (which seem, to me, to drop from just about everything in Mooshu) and stocking up on the rare drops they give.
But because it is so difficult, and because it takes such a long time (just crafting the durn stuff is a pain as you only have three crafting slots, and some recipes have nearly a full day's cooldown!), it is SO satisfying when you can finally move in.
So, yeah. It's a status symbol alright. But it's worth it, if you ask me.
I do agree its a little over prized... however... The amount of diamonds and all reagents required, is a struggle. and when you finally make the house, you will either be thrilled over making such an amazing home, or disappointment over new house coming and you just wasted time/money on something... so if you really do care for this house, put everything into it. do powerfarming at Stormriven and Bazaar... i was going to make it, i reached 110 DIAMONDS, and thought to myself: there will mostly be many houses to come, so why not wait? it took me some months to get all diamonds and nightshades, some mornings i got 10, other 0... and by the time a new world (beside wintertusk) is released, and THEIR houses released (took some time till GH and CL houses came after the world) i will have tons of reagents like diamonds, blood moss and golden pearls ready for making another dreamhome. (i have made observatory, which is surprisingly easier than Hall) When something is difficult, analyze the situation, think back, and then go for it or wait...