Of course it will happen. It's happening now. Nothing would change if you gave a group this option of loot distribution. Everyone's fear that this would completely ruin everything ffxi is unfounded.
That being said, nothing really needs to change as this system wouldn't truly change anything.
Edit: If you really wanted to exact some change for the good, let r/e items be traded by players in the group that got the kill for a short time after loot drops. This would out those "omg guys i totally meant to hit pass >< sry *grin*" as jerks. It would also help in those instances where "guys i got dc" "oh my item dropped and fell to the floor before i could log back in?" "afk /headdesking".
