You're trying to separate character growth through leveling and character growth through gear, but improving gear goes along with gaining levels. Any increase in raw character power (say, DPS, EF, or HPS) is some form of vertical progression. Your character becomes powerful, fights a tough opponent, and becomes more powerful.
Horizontal progression is learning a new skill, or learning a new way to perform a familiar skill without a noticeable increase in character power. Your character masters fighting with daggers, acquires the best dagger he can make/find, and the decides to learn archery. Archery isn't inherently better than fighting with daggers, it has certain situational advantages (good at medium to long range), but also drawbacks (weak at short range). By learning both, your character is now useful in a variety of situations. On the other hand, after learning archery, there isn't a huge motivation to learn, say, destructive magic. It fills basically the same role as archery, but does it slightly differently. The devs can encourage players to pick up destruction spells by making a host of enemies with high physical resistances, but that feels like a cheap ploy. Introducing an 'elemental arrow' skill to let archers bypass resistances would feel similarly gimicky; instead of being open about vertical progression, the devs are cutting the characters off at the knees and making the players work their way back to just be at the same power level they were already at.
What about skills besides dealing damage? There are a variety of support roles that I'm sure we're all familiar with, but at some point the abilities start to look and feel the same. Similarly, there are only so many ways to come up with new skills to handle infiltration and investigation quests that can't simply be brute-forced. Breaking magical wards, picking a key lock, cracking a safe, and hacking a computer might all be covered by different skills, but they are all really just different flavors of opening doors/containers.
What I'm trying to say is that horizontal progression games have a certain appeal for people that want to be completionists and master every skill in Skyrim or learn to pilot 8 different ships classes in EVE. That kind of approach isn't for everyone, though.
Like I said, no system is going to be 100% vertical or 100% horizontal progression, but rather is going to be primarily
one or the other with regards to content
Your character getting better at one skill is vertical progression, your character expanding into new skills is horizontal progression, yes.
But what you're refusing to do is stop considering all these skills in the context of a vertical progression system.
You are looking at the system and saying, "Well, if I have archery, I don't need destruction magic." And, you know what, that may end up 100% true. I also don't really see a problem there. It's perfectly okay for there to be multiple pathways to the same end; it adds diversity to play style options. This is particularly exciting now that the MMO genre seems to be finally moving away from the action-bar-WoW-style combat, where the actual play is largely the same for every class. So it's fine, when we're talking within the context of a limited content scenario (like, say, Raiding), that we're going to have skills that its unattractive for the same player to have. That said, it doesn't necessarily follow that you wouldn't want both skills in the context of a group setting.
But please, PLEASE, stop thinking about these skills purely within the context fo a WoW-style vertical content system. You're looking at a system that has a very limited scope of content that it releases completely new iterations of, rather than revamping it and releasing new forms of content instead.
Yes, when we are talking about a system so constricted so as to fall into 3 content areas (PVE, PVP-BGs, PVP-Arenas), multiple skills that perform similarly in one situation is a serious issues.
When we're talking about a system that has a large variety of content areas, however, it would be the epitome of bad design for that to always be the case.
Example, let's say we have the following PvE combat systems: WoW-ish style raiding (characterized by high-intensity boss fights), Dungeon-delving (more trash mobs and mini-bosses, but unmapped, randomized, and in groups of maybe 1-3 people), Siege Offense/Defense (you seize NPC-run holds, or defend one of your own factions', against large waves of mobs), etc.
Now, let's say that Archery's most significant strengths were the ability to regulate firing speed to alternate between high output and high crit firing. It has a generally low ability to manage AoE, but when combined with bomb and poison skills, it can do a decent enough job there.
Destruction Magic would be slower-casting and primarily produce high damage AoE attacks or CC. If you're slinging spells, they'll probably be lower damage type castings that you're doing for reasons other than direct damage (firing off a ton of low-cost frost spells for snares or something). Direct-damage options would certainly exist, but they'd take a back seat to the AoE stuff.
So you're probably thinking "But then their DPS might not be equal on raid bosses!" You're right, they wouldn't. And that's not an issue. Why? Because we aren't talking about a vertical content progression system.
A Destruction mage could be extremely helpful in Dungeon crawling, for their ability to help mow down groups of enemies. An archer would be useful for quickly dispatching pack leaders, or taking out something making a B-line for the Mage. Otherwise, they can produce suppressing fire, and there's a very good chance they would have skilled into poisons, bomb-making, traps, pathfinding, etc. that would make them VERY useful, even if they aren't only there for the content.
Likewise, in a raid environment, when looking for damage you're probably going to prefer to bring along archers than Destruction Mages. But maybe your fight has a fair amount of AoE (either in the boss fight, or to reach it), and you still want a Destruction Mage. Or maybe you really want a player with the other skills that a Destruction skill is apt to have, like Thaumaturgy, Enfeebling, or who knows what else.
Or, you know what? Maybe Destruction Mages only end up in raids if Destruction is the subskill they use to damage the boss in between doing other duties like healing, support, enfeebling, etc. And maybe that's fine, because their single-target options could be high-damage casts with high cooldowns, so they get to make the most of their Destruction skill AND their other skills.
But then we still have other types of PVE combat-based content. We have the castle-sieges, which would definitely have big boons for both skills in both situations, and there's probably a lot more content that could be available where you wouldn't necessarily be using those combat skills as the number one feature. Say, if they implemented army-command content. Yes, you'd be using your personal skills, and your personal skills might matter, but the various skills you had expanded into for army-command would be better.
And that's not to say anything about other content areas those skills could come into play. Poison-making could be a super effective skill for general game play when you're hanging out in a pirate port. Trap Making would be super useful for people interested in being huntsman. Stealth is useful for Sieges, Dungeons, Crime (a content form where a faction gave you a mission of X with Y parameters, such as you can't be caught... or have to kill anyone who catches you, and rewards you based on performance), PVP, etc.
The philosophy that every skill has to be useful for all content is really a BAD
one. That's why every stat and the talents have been so reduced to insignificance. And it's been necessary because there is no diversity in the content available. All their resources go into maintaining their vertical content system, and it leaves very, very little room for horizontal expansion at all. And that's a serious issue with the game.
If you want a world where endgame is extremely limited in scope, then yes--a skill system like this won't make sense. But in reality, skill systems in general just don't make sense, because everything will always come down to the cookie-cutter system. Because everyone is only interested in accessing one narrow form of content.