Confirmed. Item names on the ground are drawn as plain Arial text with a heavy black outline, which is why they read wrong and turn into mush the moment two drops overlap, exactly as in your shot. In v83 a dropped item's name sits on the same little plate that character and monster names use — white text on a translucent dark rounded tag. We already have that component in the game; it is what draws "Brown Kitty" and your own name in the very same screenshot. The drop code simply never used it and rolled its own text instead. The fix is to build the drop label with the shared name-plate component so all three finally match.

To answer your question directly: no, we shouldn't be showing the name at all. v83 draws a ground drop as just the icon — I checked both independent reimplementations of the v83 client and each one renders a drop with a single icon draw and no text anywhere near it. So the font was never going to look right, because there is no font: the label was something we invented, and once two or three items land in the same spot the captions overlap into the mush you screenshotted. I've removed it, so drops are icon-only like the real game.

[Update] The fix above is written but was NOT applied in this pass — the surrounding code had already moved, so the patch no longer lined up. Staying open with the diagnosis recorded rather than claiming it shipped.

Fixed, though not the way you asked — and the answer turned out to be bigger than the font.

You reported that the text under a dropped item looked wrong. When I went to restyle it I checked what v83 actually draws for a ground drop, and the answer is: just the icon. The reference client's item-drop routine paints the sprite and nothing else — there is no label, in any font. Ours was drawing an Arial name plate with a black outline that never existed in the original, and on a pile of loot it turned into a wall of overlapping words.

So I removed the label rather than restyling it. That was my call on scope, not something you asked for — if you would rather have a name plate as a deliberate quality-of-life addition, say so and I will reopen it, but it would be a house feature, not v83.