This was my guess as well. I've done a lot of dungeon runs on twinks and I'm not seeing any unusable drops. Legacy loot is the obvious answer.
I wouldn't put it quite that way. Personal loot just means the drops are tailored to the specs present when it was killed. Dungeons seem to have different rates of drops. A normal dungeon is about 1.8 drops per boss. Legion, for some reason, seems lower, like I would estimate ~1.4 or even less. If you kill every boss with 5 plate classes, you're going to get the same loot, it's just going to be all plate (and cloaks, jewelry and weapons usable by those classes). You're not getting less loot and items aren't being "hidden". This is the whole basis of loot funnelling.
I haven't seen any good analysis on this. My approach has been to use loot funnels like 5-manning a dungeon with 4 11 Fury Warriors and a healer (a druid in my case but a Holy Paladin would give you a fifth plate slot) and just trading loot to the toon I want to gear. It's really tedious though since input broadcasting is disallowed. And it can be really laggy.
Soloing a dungeon would be much quicker because there's not the same setup of putting toons on follow, fixing issues when a toon gets caught on a rock and follow breaks, looting on each toon, etc.
So you could get 2 drops for 1 toon but now you're getting a bunch of weapons you can't use, primary stat items that don't have strength and non-plate drops (assuming you're a Warrior). What's better? A ~30% chance of a drop for your spec or 2 drops, most of which you can't use? I honestly don't know.