Quoting Robert Hentschke,
Enemies wouldn't have to drop all items they are wearing.
That's easily explained through lore, also. Instead of a breastplate you could get a few materials and some metal that needs to be reforged. If you're killed by a fire giant, there wouldn't be much left of you afterwards. However being killed by some less destructive means, there could be a higher chance of an item surviving to be looted.
This could also provide a negative consequence for the gameplay style adopted by so many where they have summoned creatures do all of their slaying, without feeling like a punishment. It would give people a reason to refrain from constantly using their flashiest and deadliest spells, or summoning the biggest bad they can muster, if they had a higher chance of recovering items from people who were killed martially.
I really do feel that looting is one of those "I can't put my finger on it, but something's wrong here" sort of things in Elemental. In the HOMM series, it was always great fun to barely scrape through a battle against a foe, and then see that it was because they had some really choice gear.
