Here's another thought that could buy us some posts until August: Can you do an economy based on trade-skilling (UO, EVE, SWG maybe?), while still having a fairly item-centric game like WoW or EQ? How do you merge item decay or item loss with rare drops? I know EVE has such loot and its simply priceless but just as destructable as your mass produced tech 1 items. Somehow I think that wouldnt fly with the DIKU players, but making harvesting and crafting more relevant would be nice. Did Vanguard achieve anything on that front?
I don't think you could do it with rare drops, no. With very common drops, where you treat raids like item mines, maybe.
The only way a rich economic system and a drop system could be combined, is if you could only wear so many dropped items. Like lets say in the game magic items took "soul power"--which was a stat you start out with say, 10 of. Most magic items take 5 each to wear. All "magic" items are dropped, they are stronger than crafted items, and don't decay but obviously you can only wear a few. Then you can have a skill that builds up this "soul power" stat--and maybe some magic items will be considered strong, not because they have far higher stats, but that they take less "soul power" to equip. (Kind of like how some items were good in early EQ not because they had exceptional stats, but because they weighed nothing.)
This way, most players might be able to wear 5 ish dropped items on a super-built up character. But their other 5 gear slots would need to be crafted. If this is done smart, you could even have it so as new tiers come out, the magic items would have higher soul power requirements--and part of the "soft cap" skill gains in new expansions would be building your soul power score to once again be able to equip 5 or so of the current tier magic items.
Anyway, I think a system like that could work.
However, in the bigger picture--things like weight dictating how heavy your armor can be, were good systems in RPG's, that really should have been kept in MMO's--because they gave power to items without that power having to translate directly into stats. For example...If I had a 10 Strength chest, at 10 weight--and another 10 strength chest at 5 weight, the second chest might allow me to wear a heavier set of boots or shoulders--so, in a lot of ways, the second chest is a lot stronger, without character stat inflation. A "soul power" like system can accomplish this, too.
I know most developers shy away from this stuff due to complexity and assuming their customers are retarded--and for the general masses, they are probably right. I just wish as more niche MMO's come out, they start viewing armor and weapons with negatives AND positives again, so it's not a boring case of everything getting better through one type of stat inflation.