I think it's a good thing to do.
On my first Deathwing kill a rogue needed on the bow only because he didn't want other people to ninja it. And as long as you do pass it to whoever rolled 2nd highest that needs it, I don't see a problem with it.
10 people roll need and only one can actually use it - 10% chance of the item being won by the good guy.
11 people roll need where only one can use it, and if I win it he gets it - 18% chance of item going to the good guy
Sure, the 2nd option will piss off 9 people, but who cares? They needed only to vendor it.
And it's not a guild run, it's LFR. Even if player X didn't do much dps, he should still get the item if he wins.
And by your logic, he contributed to the kill and won the item fair and square. He then decided to give it to someone else.
C: 98 <-- OP
Is it an upgrade for D? If no, check C. If still no, check B, if still no, check A. If still no, keep it.
Give the item to the highest letter where it's an upgrade.
If anyone I replied to think it's okay to need in LFR for shits and giggles, don't don't bother replying to this btw.