While unconfirmed, it is presumable that all denizens will drop all of their equipment when killed, including zombies. Denizens can act as walking loot containers, and Nelson plans to implement world searchables in such a way that loot can be generated upon the moment of interaction, which should open up some avenues with regards to loot design and balance.
Previously, I had also made a somewhat relevant suggestion pertaining to what could happen when you try taking clothing from corpses.