They are still possible. I contacted in-game support.
Me: Recently, a popular subject regarding the Clockworks stopped having treasure boxes "drop" equipment. May equipment still be received from treasure boxes? Is this intended or is this a bug? For some reason many do not find equipment anymore, including me.
Hyperion: Hi!
Equipment drops from treasure boxes are very rare. It's not unusual to go a long time without seeing one.
I still have my doubts. 8 months since free elevator updates and no confirmed item drops.
They must have really nerfed it since they expected people to be playing more often.
I actually play about the same as I did when ele passes were around. A lot, but not all day.
http://steamcommunity.com/sharedfiles/filedetails/?id=143865809
My last item drop was May the 7th, 2013.