Might & Magic X Legacy had something like this and it worked fairly well.
The game had a baseline of randomize loot ranked in more or less 5-6 tiers of quality (can't remember exactly) and then every now and then you could loot golden pieces of equipment called "Relics" which had the interesting characteristic of starting as basic items in power (they were at the level of a good early game magic item and nothing more) and then rank up in level for three more times. At level 2 they were decidedly better, at level 3 very strong and at level 4 they became basically "best in class" in their respective category of weapon/armor.
Of course as a result by the end game they were basically the only items that really mattered for your party and every non-relic item was just a placeholder/vendor trash waiting to be replaced.
If I recall correctly, there weren't enough relics to fill every slot on every character, so the other drops still maintained some relevance.
Pillars of Eternity: Deadfire had a worthwhile system as well. Early drops would be "fine" (roughly equivalent to +1 in D&D) but if they had enchantments that you like you could upgrade and keep them relevant to the end game.
I think that keeping a limited number of tiers is the key here. Three or four levels is probably enough.
