I guess that is one of the main ideas behind the metaphor of "irrigation pipeline". If we have such an irrigation system which is pouring too much water for plants which need only a little of water, and leaking in many spots and failing to deliver enough water to the remote parts of the garden, then the solution is not to get rid of the whole pipeline - the solution is to fix and adjust the pipeline so that it does what it is supposed to do.
So, on the level of society I see formal power structures and institutions and legislation as the irrigation system - they are devices to distribute the water of welfare, equality and justice. But at the moment it seems that the irrigation system is working only partially - it fails to deliver enough welfare to where it is needed the most, and leaks money and benefits to those who already got plenty...
And an informal hippie-style group (or an ordinary family, a school class or a workgroup) won't do any better if people still carry those same kind of oppressive power hierarchies in their minds. I think this is the power of Val Plumwood-style feminism; to show how inequality and oppression are based on our ways of thinking and evaluating the world - this is just another level of the irrigation pipeline. Formal hierarchies and structures are easier to criticize as they are external and visible. Mental structures are bit more tricky... Fundamentally, it is those informal, internal, cognitive and emotional mental structures which need to be renoved - not abolished, but improved. Or, this is how I see it. (and of course Val was not the only thinker suggesting something like this - I just tend to refer to her because I'm only familiar with her writings.)