30 Mar 2006 at 19:49 - 2
In my guild, we usually drop stuff just to show everyone. Open a chest, ID and drop at your feet -- that way you don't have to type or open trade with everyone to show them what you got. However, outside of the guild, I would not do this. I think the majority of players think that if you drop an item from your inventory to the ground, that makes it fair game. If the person who dropped it explained that they were picking it back up, or they asked you to return it after you picked it up, I would think the only decent thing to do is give it back.
So basically, I think you played it right, the person who's item it orriginally was is a darsh, and the person who ended up with it is also a jerk.