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narf poit chez BOOM said:
City of Heroes solves the problem by giving loot directly - You don't need to pick it up - As far as I can tell, whoever does the most damage gets it.
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In AO, people who are not teamed get looting rights based on damage too, but people who are teamed can be given looting rights either: team leader only, all equally, or rotating. Awarding looting rights based on damage when in a team would only hurt support professions who aren't supposed to contribute damage but are essential in a good team, i.e. healers, crowd controllers, team buffers etc.
But really, Agentzero's problem is a trust problem and this is something that no game mechanic can really solve. In later levels this gets even more important. Imagine giving some uber rare drop worth hundreds of millions of credits to an engineer to tradeskill into something usable in game. The trust issues involved are just headache inducing. Which is why in later levels you really want good friends or a good, reputable org (guild), since those will kick members who behave badly.