My opinion is that it definately disrupts the balance of the game. I don't think this is arguable.
Therefore, the end result must be that the playfield is made balanced.
I don't care how you do it, just as long as it's fair.
Why not give people a fair warning that over-equipped items will be unequipped on such and such a date and keep reminding them on the web, in-game server messages (like the one that just said the server is going down), bring up a window and make people click <Yes, I understand the items will be unequipped if they are over equipped on date, if there is no space in my inventory or bank the item(s) will be lost> and have them click it everytime they log on for a week or two, and whatever else it takes.
Bottom, line is something must be done about over equipping.
Thrin