The type of key should be determined by the kill streak of the person you killed for it, 1-3 bronze, 4-7 silver, 8-15 gold, 15+ diamond, that way the rarer items from rare keys will stay 'rare' and it also adds an incentive to fight people who you know/expect to be better than you.
With regards to loot, I'd say different tiers of the following; a 1/3 chance of each; veng melee gear, melee/mage hybrid gear, tribrid gear. with the lowest tier being rune tc. and the highest tier including at least one actual maxed item like an ags, sotd or acb etc.
I can think about the above items if you actually want to add it.
