You should distinguish what MonsterLevel Adjusting Mod is able to do and what this mod is doing by default, and by default it only gets active on
Erthos Struggle map (and maybe on other custom maps too if the mapper has tuned the map appropriately).
However there are two possibilities to profit form this mod also on the official GPG maps, please see the mod
readme or the
FAQ how to do this and about possible risks (mainly concerning quests).
But i'm not sure if this mod will help you in your case, that's not really the situation this mod was made for.
Because - assumed once GPG has defined for a certain container to drop a reward only 'half as good' or to include intentionally low-level items too then it doesn't help a lot if the container level is around your average party level.
Luckily that's rarely the case but actually it may happen - not for regular, rare or unique drops but sometimes for set drops so the player gets the chance to complete a set where he has missed an item.
Unfortunately a mod for your intentions doesn't exist as far as i know. It would require to totally rewrite the drop definitions, to reduce the low-level-item probability (that isn't be so difficult) and to turn all drops into melee (that would be much harder).
Actually there are some drop definition related mods but they are rather doubtable. Instead of appropriate or even customizable tunings they just flood the game with items, as if quantity is the same as quality...
Generally keep in mind that too good items just will make game easier - imagine now having 4 melee fighters, all with rather string powers and all full of super-magical equipment - that must be as if you play a game made for your 6 year old nephew.
So perhaps you should just feed the unneeded stuff to a melee pet (by using the feed-first-cheap-type-related-items-from-shops hint). Alternatively you could sell the unneeded stuff to use the gold to enchant items - maybe your chars won't look as pretty then but enchanted items help a lot to eliminate individual weaknesses of a char.