Siege of Avalon did something similar with equipment. What was available was based on the opponent you defeated; you might not get all of the equipment, since some could be ruined in the fight, etc, and they might (rarely) be carrying something extra, but you pretty much got a selection of what they were wearing. The inventory was also limited, so selling excess collected loot required a bit of tedious running back and forth.
The setting is in a castle under siege (and the surrounding area), so initially the equipment you bring back can be sold for a fair amount of gold (which is needed mostly for skill training). The more you sell, though, the less they are worth. Eventually most of the equipment becomes worthless, which makes it a little boring checking defeated opponents on the off chance they might have something new you can upgrade.
Overall the game was fun, if a little short, but IMNSHO I have to say the 'realistic' equipment drops and inventory size were negative points.
