I've found the loot drops to be reasonable across the chapter as a whole. The prison camp is scarce (as you'd expect), but the quality and quantity both dramatically improve as you move on to other parts of the island.
I'd be 100% in favor of dropping durability and related traits though. It's one of those RPG mechanics that seems to persist out of inertia rather than because it does anything meaningful and it's rendered moot the moment you pick up a repair hammer.
