The rulebook says that you can only carry 12 items of any combination. But it doesn't specifically talk about dropping items.

• Can I drop an item (equipment or treasure) any time?
• Do I have to wait until I have 12 then discard what I want to keep additional items?
• Do I just get to 12 and then don't get anymore?

Thanks.

We played that you couldn't drop anything until you were at full load limit. The same goes for taking wounds. Once we hit 12 then characters started dropping their smaller treasures as they tried to escape!

This is from pg. 7 of the rules, referring to Phase 1: Adjust Wound and Load Level...

"A player’s WLL cannot exceed 12. Starting with the Dice Keeper and going clockwise, each player may choose to discard any number of Treasure, Idol, and/or Equipment cards before determining his WLL. Place these cards into a common discard pile beside the game board. This free action allows each player to manage his personal Wound and Load Level.

Note: If, at any time, an action would cause a player to exceed a WLL of 12, that player must immediately discard a single Treasure, Idol, or Equipment card or the action cannot be performed."

So, yes, you can drop any number of treasure or equipment during phase 1. Anything dropped is discarded.