Item Level Drop question

[Shammy]

Is the item level of loot drops determined by your average item level or by the wrath level that youre running? Or by your character level? Feel like Ive been grinding in the wrath 2/3/4 range for days and not getting higher drops.

Also, with higher item level drops, I assume the stat ranges/scores are larger? So better chance at getting higher scores than with a lower range?