When you queue for a normal mode you should be rewarded thusly since there are no modifiers on (Hardcore, Unique Char). In this case common and uncommon gear should be rewarded from chests found through any respective level.
Let start from the most difficult and work our way down as this seems the easiest way for me to explain this system:
Advanced + Hardcore + Unique Char = Epic-Legendary drop from bosses; chests reward blue or better
Advanced +/- Unique Char = Rare-Legendary drop from bosses; chests reward blue or better
Normal + Hardcore + Unique Char = Rare-Epic drop from bosses; chests reward Uncommon or better
Normal (no modifiers and/or Unique Characters) = Uncommon-Epic drop from bosses; chests reward common or better
Does anyone have an issue or comment to add? The current loot system is pure RNG at the moment and needs a little organization and sanity injected for how loot is attained.