Item loot while interesting to think about would definitely hurt the population, economy, and pvp in general. Nobody would want to play knowing someone 8 levels higher and far better geared could just come steal their gear. People wouldn't buy gear knowing it could get stolen. People wouldn't even try to pvp any more because they would be too busy bagging everything. Personally I would love it if it could work but I just don't see any good coming from it.
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