Guys, it's about expectation, not probability. =)
The expected utility of an object is the probability that it spawns * its utility. I think that "game balance" is defined in terms of averaging out the expected utility of each of the objects that are defined in the game in an asymptotic sense (i.e. if you play a ton of games, it will be balanced).
So, if the drop rate goes up, the utility (or "poweredness" if you will) lowers accordingly in the form of a "nerf". Since everything is computed here by expectations, the generation method for the object becomes important. Why some things seem overpowered in game comes from the generation method -- it makes these objects appear too frequently, and so their expected utility exceeds what an ideal "balanced" game ought to be.
Of course, it gets more complicated because we can change the utility of an object by taking traits, but that's a slightly different problem. =)