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If I need to pick something up IRL but I'm already carrying something, I just stomp it into oblivion so I can never have it.
Sometimes people pass on gear because they can't use it yet (yes, there is always greed), or they assume that someone else in the group wants it and will need it. Sometimes it ends up being that everyone passes for w/e reason, and the item is lost. But if it wasn't destroyed then somebody could always have a second chance to at least take it for later.
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The way it should be done:
-Select Need/Greed
--Inventory Full?
---If Yes, a message will display "Your inventory is full, cannot cast lots", and your need/greed is cancelled.
---If No, work as normal.
This'll give people enough time drop something so they can lot what they want.