Played some Iron Banner tonight, just so hit and miss. Either you're on a great team, or a terrible one. I think I had maybe 1 match where it was actually even. Shame I'm sooo outclassed with my light level, get smashed all over the shop.
What level gear does Trials of Osiris get if you win a few games?
It's pretty much the same for drops as pve. You will get stuff that is just a little better than what you are wearing at the time. As for light level it's not that bigger difference. 20 light equals about a 10% difference from what I have read. You hit 10% less they don't do more damage and then you also need to take into account the light on that weapon.
I played iron banner the other day at light level 280-290 and with sniping it made no difference at all. With red death I had to hit them with an extra burst to drop them.