At the very least with everquest (iirc) npcs would sometimes use their loot. I recall tanks occasionally letting the rest of the raid know what weapon drop the boss had on them because they were seeing a different damage type (pierce, slash, bludgeon instead of hit) and the boss was known to sometimes drop a certain piercing weapon (for example).

That being said, I can totally think of a few ways to get around that. It's like you said, the client doesn't really need to know until the enemy is looted.

[Actually, the one exception that I can think of is that rogues can pickpocket certain loot. And while pinging the server to generate loot once the npc is dead feels like it shouldn't be a major problem, having to ping the server to generate loot while the npc is still alive does make the system architect in me feel a bit more nervous ... at the very least for systems as they were when EQ first came out.]

Modern games you don't need to unless the boss changed depending on the loot and even then it would be tangential. Don't forget this is EQ2 we're talking about internet back then was sloooooow and online games of that type were pretty new so designs and security were still being sorted out. Now you know from the beginning that any useful information about the enemy and world will be pried out of your game so you go through the whole anti-cheat cat and mouse game.