Image: http://img109.imageshack.us/img109/3417/iea9.png

Bug: This bug happens extremely often and can be seen pretty much every 5 runs or so, items and heats dropped by players or mobs can end up appearing to hover far above or below there actual location. If you walk over the place where the items are hovering they will teleport to the ground and be pick up as normal.

Possible issue: Client (since it's client side only) and server having a disagreement about the item's location. ie out of sync