This amuses me, 'cause I'm always the guy being all skeptical and saying that we should conservative about balance and such, but I don't see any problem at all with PCs selling items to each other.
I mean, don't other DMs look at what a PC has before giving out treasure? Suppose Kama'zer reaches 12th level, gets a +3 sword of butt-kicking, and decides to sell his +2 sword of indifference to Noobicus, a level 3 player who just happens to have a load of cash lying around. Now there's a level 2 player running around with a level 8 item. So what? As long as at least some DMs and judges and fellow players are paying a little bit of attention, Noobicus will get the short end of the stick for a while, and by level 5 or so it will all be back to balanced again. It doesn't even matter what price K'am'a'zer gets; it still works itself out. (Now, admittedly, we'd have to keep an eye out for outright twinking. If K'''amazer gives his sword to Noobicus for free, then just happens to go on an adventure with Noobicus with his newly-created character, that's a situation where we might want to intervene.)
If DMs aren't paying attention, we have worse problems than hand-me-down loot.