You can still sell to NPCs, just not to other players. (Of course, this sort of low-level gear doesn't get more than a few gil from NPC merchants, but technically you can still sell it.)
Printable View
Well, you included dropping it in your list of options, and that gets you even less. :p Of course, if clearing out space I wouldn't make a point of holding on to low-level gear to sell later when I'm at an NPC vendor, but if you're at the vendor anyway, might as well...
I still don't think I would. Faster just to drop it. I could go outside and kill ladybugs and get gil faster than selling old gear at an NPC.