Hi Tony,
We discussed this issue in detail during the 2014 Moodle Gradebook Development Conference in Long Beach, California; there are entire research papers written on the topic.
Prior to 2.8, the DL/KH was calculated inaccurately. For example, if the two lowest items were 10 /15 and 20/50, it would drop the former.
We also discussed your idea to drop the lowest contributed weight, but that runs into the same problem since a lower contribution does not necessarily constitute a benefit to the student, which is the spirit of the setting. Yet another suggestion was to drop the lowest percentage, but that doesn't account for weighting.
In the end, we opted for the "purest" method, which is equity to all students by only allowing a drop low or keep high of items of equal value. If an instructor truly wants to do it their own way, they could use a custom calculation. Obviously we continue to be open to discussion, but we have to balance overly complex features with ease of use.
Mark McKay
University of Minnesota