I attempted to replicate this issue myself but could not find another huge item to do so with. After picking up a "huge crude battle axe" (as a dark elf) I could not get the item to show up in the drop list. It did in fact show up while viewing the inventory but I was stuck with nearly 1000 stones of wasted space as it could not be equipped or found to drop. I am not satisfied with my knowledge regarding this issue and will attempt to investigate more personally.