I don't know how difficult this would be to program, but perhaps use this guy's base system and make it so everyone has their own seperate rolls on the whole loot table. Then it's not a 5% chance it will drop at all, but a 5% chance it will drop for each person. Then have the option to pass on loot. All passed loot goes into a community pool at that point, where people can then cast their lots. You could avoid ninja looting by dropping people from the group before the item is passed into the community pool.
I don't see any real reason that you should have to fight competing NM claimers, then fight a dismal drop rate, and then fight the inner-party competition for the drop, if and when it does come. If a drop rate is below 7% or so, then I see no harm in making it slightly more accessable to people strong enough to fight whatever drops the loot you're looking for.
edit: expanding the explanation.
Edited, Nov 13th 2012 2:38pm by IKickYoDog