The gist of it: the only way you can use DL/KH is if the items in a category all have the exact same weight and maximum grade value.
It seems like a huge shortcoming of this feature. Ultimately you would want the gradebook to always drop or keep the lowest/highest weighted value, unless I'm missing a use case where that's not true. So, the idea would be to have the DL/KH feature look at the items' contributed weight to a category or course and then drop or keep grades based on that.
Right now the use case of using DL/KH is severely limited by these restrictions. Has anyone else run into issues with this?