We noticed last night during a guild group, we grabbed some lowbies to play together. They were in the low teens, and I was 30 hunting in SI. The gear they got was lvl30 but the AF of the armor and the DPS of the weapons was scaled down to them (as they got the loot). So what would normally be a AF 72, was AF 20, and DPS 9.9 was DPS 3.6, but on lvl30 gear.