After having armour or offhand items equipped using commands, Allay's do not drop them on death.
MC-249715 was resolved properly, and they drop handheld items (something which is obviously possible to trigger in vanilla survival).
MC-249830 may be an impact of this. If this should be moved onto that bug report please comment as such.
However items in other slots (only possible with commands) are never dropped on death. Offhand items are even rendered, but not dropped on death.
Steps for Replication:
/summon minecraft:allay ~ ~ ~ {NoAI:1b}
/item replace entity @e[type=minecraft:allay,limit=1] weapon.offhand with minecraft:emerald
kill Allay in creative or with /kill
No Items will be dropped
Forcing an itemin hands with commands doesn't modify the drop chances, that's still set to an incredebly low chance to drop. If you give an item by hand, or they a mob picks one up, or gets one forced on by a dispenser, then the chances are set.
You need to modify the drop chances as well.