" we were talking about quality loot." What is the quality loot? Probably a loot which is better then you are wearing. Is that mean that correct loot generator must create better loot after each battle?
I hate systems where you get a magic sword and heap of gold from a dead wolf body. If you fight with monsters those monsters must own these items right? So case you will have good loot all the time means, that you need to fight with over powered enemies all the time.
Or you can gather items which your enemies probably should have, then sell them, extract magic esence, and craft to something else. But well, you still have a game with a lot of junk.
I agree that true Legendaryes should be placed manualy. Those items have some story. Have you foound a Peter Lee's sword? :-] Your heroes, creates a legend in fact. So your items forged thru the craft becomes a legend. The color of item regardles. Just check the Braxus axe, actualy its a junk. But it is the axe of the legendary Braxus.