I rarely run quests of my lvl or lower. I am always running quests that are above my lvl. However, this means that any loot I get is unusable due to having a ML above my own.

I therefore suggest, that while the amount of loot be based on quest lvl (number of items as well as currency amounts, etc), but that loot that drops should have ML reduced to the player's lvl. For each drop in ML there is a small chance to get masterful workmanship that gives the item slightly better stats for it's ML (thus it is easier to get that by running quests above the player lvl than normal or based on difficulty).

This way, any loot gained is useable barring any class/alignment restrictions.