Vegepygmy
First Post
First let me say that this situation is extremely rare in my experience; I have a considerable tolerance for what others might consider "broken" magic items. For example, in my current campaign, a 2nd-level character wound up with a cloak of resistance +5. While that is far above the "appropriate level" of power for the character, it hasn't had any negative impact on the game that I've noticed.Clearly the item must be altered or removed from the campaign...
But accepting what you say as true, that the item must be altered or removed from the campaign (and that is certainly possible), my preferred method is to subtly remove it and replace it with something more appropriate. By "subtly" I mean making it seem as if I didn't deliberately make sure it got removed, even though that's exactly what I did. And I would make sure to replace it with something more appropriate (again, hopefully without the players ever realizing that's what I did) because it seems only fair to do so.