But this doesn't work for RPG's. A fellow gamer looks at you and thinks "hey, he spend money and has better equip, I won't pay so why should I continue playing?".
Some games do allow exactly this but they are designed in a different way. Those games are made to have a stickyness of maybe 3 month (With stickyness I mean how long the player actively plays). In this case it is ok to sell anything you want as the player is merely a bypasser in the game world. The business concepts varies here: some publishers push millions of users through their games and only a fraction stay. Many user in - many users out.
Some games, usually virtual worlds like MMOG's, have a larger stickyness. I heard from games where people play it since years, just like you read from World of Warcraft. Exactly here the word "itemselling" is hurting the user base.
So care must be taken how you implement item selling. I prefer the term "Micropayment" as you pay in small amounts and buy things which aren't usually visible to fellow gamers in the same world. A famous example is the XP scroll, which grants you a temporary boost in experience points you gain for monsters and quests.
However the experimentation goes on and usually the creative teams thinking exactly what their customers would pay for are successful. Here customer bahviour or motivation research is very important.
In one game I have data that seasonal items are the best sellers. Halloween costume anyone? Santa Claus hats? People who spend a lot of time in a virtual world love this. Ask yourself why and you are close to find the grail of itemselling.
Generally there are a lot of good business cases here but what works is hard to research if you are just starting or don't have connections to the industry. Thats one point where I usually get paid for, to tell people which works and what doesn't for their online game.