One of my main goals when running the Age of Worms campaign (and Shackled City before that) was to make use of the massive shelf of d20 books I have. As a total gaming nutjob and a game designer (who trades/receives comp copies of books), I have a whole 6-shelf bookcase full of d20 books, most of which I've read and never used.
So, I allow them to use any item from any official D&D book except for Oriental Adventures and the Eberron/FR books. Also, I reserve the right to approve/veto any item pulled from the Book of Exalted Deeds, Spell Compendium, Complete Divine, and Races of the Wild/Destiny/Dragon. Any non-official D&D book is approved on a case-by-case basis, unless I wrote it (in which case it's allowed by default).
Currently actively in use, I have Libris Mortis and Heroes of Horror for my side of the DM screen, and my players are using items from Races of Stone, Unearthed Arcana, Complete Warrior, Complete Adventurer, Spell Compendium, Draconomicon, Weapons of Legacy, Complete Divine, Complete Arcane, Dragon #338, the Planar Handbook, and Dragon Magic.
The only thing that I've found to be dangerous is the undead bane weapon in the wrong hands. Particularly, I've got a half-orc ranger who put all his favored enemy bonuses into undead and has an undead bane composite longbow. Let's just put it this way: with haste and all his archery feats, he could output around 80-90 damage at range on a full attack at 11th level. Just be wary of this, and plan ahead. The fact that he's dishing out that kind of damage at range can be problematic, especially for enemies that have no ranged attacks.