Item loot doesn't work because its too cut throat.
Might as well have Sullon Zek rules where level 60s can kill level 10s.
Having item loot just increases the grief component.
Casters clearly have the advantage at lower levels.
Once no drop raid gear drops for your guild, you become godlike killing people in chainmail.
Its just a game with higher stakes that will drive away casuals.
Obviously we need casuals to increase server population.
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