We used to be able to set the loot threshold in parties below "green" items, to roll on white and gray ones. It was really only useful to be funny, although I heard some guilds used it to help Core Hounds get looted back in MC.

It doesn't seem to work anymore:

http://img511.imageshack.us/img511/8904/setlootthresholdkg7.png

Is this just something on my end, or was it nerfed for some odd reason?

It really was changed in 2.1.2. It was being used as an exploit during one of the dungeon encounters. :)