So it is a little more complicated than that.
What if a PVE player is selling another PVE or PVP player a backpack, diving tank, or parachute? They cannot do so because the receiving player won't be able to pick it up.
We also have cases where players trade backpacks. For example, you buy a bunch of stone from me, so I drop my backpack full of stone and you drop your backpack (either empty or with scrap) and we trade them.
To answer your question, however, I did do a little further testing. it does appear to affect PVE to PVE and PVE to PVP players only. If both players are PVP, then they can pickup/loot diving tanks and backpacks. Oddly enough, however, once dropped neither player (not the original owner nor the other player) could pick up the parachute, lol. So not sure why that one is broken.
Is it also shared between clan members or just team members? It would be nice if clan sharing was also an option (they are not mutually exclusive on my server).