So yesterday I finally pulled off an ilvl of 329. I ran a couple heroics halfway through, but I had to leave for other things. I queue up again later, now in 328. In the exact same gear. WTF.
You probably sold a piece of gear that was in your inventory which would have been higher than a piece that you had been currently wearing. Basically, the game calculates your average ilvl based on the highest piece of equipment in your possession, not necessarily equipped.
It counts gear in your inventory so that you can't just take off your gear, get an "easy" dungeon, then put all your gear back on. You probably just sold an item or 2 that was ilvl 333 or something like that. Don't worry, that just means your not fully ready for heroics yet, just replace one little piece of gear.
I'm pretty sure it counts items in bags as well so equipping and unequipping isn't going to work or make any difference. However vendoring an item of higher ilvl can and will reduce your average item level if that is an item that is contributing to your score.
Does anyone know if items in your bank is counted into this as well?
How about BoA items?
If you have for example a T10 chest in your bag AND a ilevel 333 chest equipped, does it only count the ilevel 333, or the T10 item in my bag as well?