At the very least with everquest (iirc) npcs would sometimes use their loot. I recall tanks occasionally letting the rest of the raid know what weapon drop the boss had on them because they were seeing a different damage type (pierce, slash, bludgeon instead of hit) and the boss was known to sometimes drop a certain piercing weapon (for example).
That being said, I can totally think of a few ways to get around that. It's like you said, the client doesn't really need to know until the enemy is looted.
[Actually, the one exception that I can think of is that rogues can pickpocket certain loot. And while pinging the server to generate loot once the npc is dead feels like it shouldn't be a major problem, having to ping the server to generate loot while the npc is still alive does make the system architect in me feel a bit more nervous ... at the very least for systems as they were when EQ first came out.]
NPCs also gain stat bonus from their equipment. NPCs wear every slot except only 1 wrist,finger,ear. Big difference between a mage pet in full banded vs naked.
That being said, I can totally think of a few ways to get around that. It's like you said, the client doesn't really need to know until the enemy is looted.
[Actually, the one exception that I can think of is that rogues can pickpocket certain loot. And while pinging the server to generate loot once the npc is dead feels like it shouldn't be a major problem, having to ping the server to generate loot while the npc is still alive does make the system architect in me feel a bit more nervous ... at the very least for systems as they were when EQ first came out.]