Quest items definitely were filtered out. Charm pets from day one til now on live still wield and drop when kill most all items given to them.
No Drop items they immediately destroy (fixed in early classic to prevent trading no drops)
Quest Items I believe either go into a hidden inventory that the game holds onto until the quest is completed and then that inventory is flushed. Basically this is what allows Multi-Questing to occur.
Once one of our clever devs has time to test some things and figure out how to handle thre quest item issue, this would be a great fix. Plus it would save GMs from some petitions (err mer gerd I have my CoF to a snake... Well then kill it).
Plus it will be fun for higher levels to dump off random lore items that they let rot on snakes and bats. Tons of Chardok weaponry for example that rots will find its way onto random mobs as a free prize to noobs who slay these mobs.
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