The reset process has always been somewhat flaky due to the underlying Bioware code. They apparently didn't intend for people to permanently lose level, instead they used temporary level drain. When I reset XP to zero, the coding doesn't really know the path your character took to get to maximum level. That's why some classes, like RDD, should never reset.
By the same token, some of the protective scripts I wrote to prevent exploits could affect a character during the reset. For example, if you are wielding an item that you don't have enough levels for, the script will unequip it. If you happen to have a full inventory, like many people do, those items will be force dropped.
Another function triggers when you drop items to see if it was force dropped. If so, the item is destroyed. Back before that script existed, people were farming for special items by killing bosses with the character's inventory full. Every time the boss was killed, the item would be dropped on the floor so the player could do it again and keep getting them. That coding also checks for a disarmed weapon and restores it to your inventory when possible.