I generally take on quests multiple levels above my level, but this means that all the magic items I get are too high for me to use. Because it is so rare for me to get to actually play, it can be months before I get to use anything I find. I usually just sell everything and buy all my stuff off the auction house because I basically never get loot usable at my level.
Thus I suggest that loot minimum level caps at the player's level, but if the adventure is higher level, increase the chances, or just make it certain, that loot with be masterful quality ir better. That would let players actually use the loot they find, and yet still make the loot better than normal when the quest us high level compared to the player. It actually gives a much better reason for players (who aren't reaper crazy game breakers) to take the extra risk of delving into quests above their level.