He said that even though you cannot roll on an item that is outside of your armor class, you could explain to your group that you need the item. He stated that they would be tradeable for a short time within your group.

http://forums.worldofwarcraft.com/thread.html?topicId=20677581818&pageNo=1&sid=1#14

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Q u o t e:
You can still Greed a potential upgrade item. You can still talk to your group and explain that X is an awesome item for you and would they mind passing on it or even trading it? (You can trade BoP items for a short period of time following the same rules that apply today.)

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But today I was traded an item after I explained it was an upgrade (I rolled on healing cloth on my druid alt) and upon exiting the instance the item had disappeared. Is this working as intended, or was this really a change?

I don't think loot vanishing has anything to do with the Need Before Greed loot system.