Unbreakable in normal gameplay, but not to player stupidity. If you are going to be stupid, live and die with the consequences.
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So, the player is an idiot if they dropped a "Rusty Iron Key" they found at level 1, which would then be needed at level 50 to open one particular chest in the end game? There's two extremes there, hand holding by not allowing quest items to be dropped, or screwing the player over completely...
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That would be asinine design.