As I ran through the first couple of zones in Northrend, I did not get a single item that was an upgrade. Something bothered me through all of the drops and quest rewards. One of my add-ons shows the Item Level (iLvL) of every piece of gear. For almost every piece of gear, the Item Level of the drop was higher than what I was wearing, yet the stats were inferior.
iLvL (or Item Level) is the way that the strength of an item is gauged. The higher the iLvL, the higher the “budget” of points that is used to assign to attributes, damage, specials, etc… The formulas for iLvL are quite complicated, and are only known through reverse-engineering from in-game numbers, since Blizzard has not released their actual calculations.
But is it “working as intended?”
I offer these two items for comparison. One item is from the Burning Crusade, the other from Wrath of the Lich King. Neither has any special abilities, so it is easy to compare them.
Mysterious Shell – obtained at level 70, requires reputation with the Violet Eye. Item Level 120.
Frostbite Bullets, available for purchase in Northrend at level 75. Item Level 154.
As you can see these items are exactly the same with the exception of the required level, and the fact that one is of Epic quality while the other is not. Despite that, the item level of the WotLK bullets are significantly higher than the epic BC bullets.
What has happened here?
The answer: the Item Level equations have changed in each expansion.
If you look at the WoWWiki page on Item Level, you can see that there are different equations for pre-BC, BC, and WotLK. Why would that happen? Presumably the item level numbers did not scale well as each expansion upped the power range in a non-linear way. The jump from pre-BC to BC gear was notably sudden and steep, for example.
Pre-BC, the Tier 3 armor was the best in the game, and it had an Item Level in the 86-92 range. In BC, Sunwell gear went up to item level 164. Yet I think we would all agree that Sunwell gear was more than twice as powerful than Tier 3 gear. Thus, the equations needed tweaking. The same happened in te release of Wrath. That tweaking makes Item Level comparisons between expansions inaccurate.
Conclusion… it seems to be working as intended, but it makes it useless when comparing pre-WotLK gear to new gear in the expansion. If you have an add-on that shows iLvL, don’t bother using it to make gear decisions until you are comparing WotLK gear to other WotLK gear.