Originally Posted by
aocjv
Only the DPS and item stats matter.
Each item has a "budget" that goes into its stats and bonuses (e.g.,"+12 Str", "+100 combat rating", etc). Epics have a bigger budget compared to blues, which in turn have a bigger budget compared to greens.
I've found that between items with only 1 color difference (i.e., Purple vs Blue, or Blue vs Green), it is approximately 10 levels where the items become roughly/almost equal (e.g., level 60 purple guard sword ~ level 70 blue guard sword, and a level 40 blue guard sword ~ level 50 green guard sword). There's a lot of approximation here, so that's not really a hard and fast rule, just something I've noticed as I levelled up some chars.
In short, there are no "hidden" penalties for using whatever colors or levels of items. What you see is what you get based on their stats.