Ok, to answer some questions. YES, you can xmog ANYTHING that is allowed by Blizz that a higher level toon personally has on them that is the same item type (leather shoulders > leather BOA shoulders). NO, it's not a bug to xmog heirlooms and mail back to your lowbie, did you not see the Blizz GM who did it on his level 1, it's in this very thread. NO, you cannot then sell the item you used to xmog another item, you have to keep it as long as the other item is xmog'd in your bank, bag or void storage. NO, you cannot personally on your lowbie xmog any item you cannot equip at that very moment even if it's soul bound in your bag and is of the right item type.
As of this Sunday every level 1+ will have access to MANY complete sets from Classic WoW (and beyond?) via the new DMF island and it's dailies, which give those tickets, which you buy the "new" xmog gear with, which Blizz intended you to do. Hope that helps.