You know what game had the best equipment progression? Gothic 2. I'm saying 2 because 1 locks you out of 2handed weapons for way too long.
What is the premise that makes it so good and so different from the Diablo 2 inspired item bloat of the Autist? Well, firstly, the game teases you with armor. Who hasn't thought: "wow, this is cool armor" once you've entered the city and Lothar starts talking to you. Also, equipment, especially armor is a reward for: a) story progression, b) monetary progression and c) guild progression. The armor acts as identification as well, strengthening the whole RP in RPG. I always found the combination of working for your equipment and clearly belonging to a recognized group great. These are very unique options that have much more character than: oh, a gorillion drops of green, blue, yellow, red items that you have to sort through. If the point of a role playing game is role playing, then Gothic found the perfect pace and system to enforce it. The case could be made for weapons as well. Remember the whole Magic ore blade thing? How you consecrate it, and then find a way to make it even stronger by the end game. How the Paladin endgame armor is tied to a quest in the Monastery that you might as well miss. These are such great things that have not been repeated since, they were even toned down or almost taken out with the rep system introduced in Gothic 3.
I think Morrowind did well for a more open RPG, the items weren't so abundant that they start to annoy you. I always get frustrated by ARPG style looting systems where you get a full inventory of magic crap five minutes after you step into the wilderness, it kinda defeats the purpose of unique and magical equipment. There are some games that pull it off without being annoying, Diablo 2 for one wasn't so overwhelming, Divine Divinity was clearly inspired by it but had enough unique items that you had to work for to feel special (Slasher, ect.). The thing I can't take is, for example, Grim Dawn. The game throws so many items at you that I wish I was a daltonist, it really makes no sense in any regard except satisfying those slot machine ARPG addicts that get off from every kill because it could be THAT (right colored) drop.