If I understand it correctly, an item will not drop unless the monster level is equal or higher than the quality level. Therefore if I farm, say, Hell Den of Evil, area level 79, I can in theory get all Elite Polearms, up to and including Cryptic Axe, with quality level 79. Unique monsters have +1 or +2, so the item level would be 81 in that case, but the next one up, Great Poleaxe, requires monster level 84.
Have I got the above right?
Correct for the base items. A lot of uniques have higher quality levels than their base item, so if you’re in an area where the base item can drop, if the monsters level isn’t high enough, they won’t be able to drop the unique version of that item.
Also, monsters down to 4 levels below the qlvl of an item can still drop the item, but each level results in a -20% chance to drop, reaching a full -100% chance when 5 or more levels below. This is why it is possible to drop a Sacred Armor (qlvl85) from a normal cow in Hell difficulty (mlvl81), but the chances are very slim.
Ah OK, so it is:
item level = area level → monster level → +1/+2 unique monsters/bosses → +1 … +4 (random)
just so you know The qlvls (quality levels) of the base items are actually their base qlvls (which influence their ability to appear in vendor screens). The qlvls (quality levels) of set and unique items are the minimum ilvl (item level) the item must be able to roll set or unique.