I understand that they shouldn't drop ammo while they can still be revived, but when someone is actually eliminated they should still drop their ammo.

That's consistent with the previous non-squad game (which is why I think this is a bug), and it would help a lot with the ammo shortage we're getting in squads after killing a couple of teams.

Thanks! And I love the new squads mode. It brought the Rec Room comradarie to Rec Royale! Tonight I had a blast playing for a couple of hours with someone I had never met before.