I think if you have a higher level within the scaling range of the content (say, 1-60 for wailing caverns) - then the lowbie will receive loot correctly. Of course, that makes it difficult to really run a character through since the content scales to your level - so your lowbie would likely be more geared for their level than a random <60 toon you have lying around.
I think I saw that some people were looking to make "twinks" to run 19s through dungeons. I can't remember exactly what this was, but I wouldn't be surprised if someone made a 58 or something with basic outland gear for that purpose. I haven't actually seen anything of the sort, but I'd imagine a 58-60 blood DK would have no trouble soloing dungeons.
Of course, this is all based on the drops actually working if everyone is <60...which I'm not 100% sure is the case.