Ok, as I thought that each time it changed the type of people attacking us, for example, once we had beaten off the peasants and it moved to bandits, I would keep the weapons I picked up then.
This meant that I was stuck using any weapon I picked up regardless of whether or not I dropped it or asked for a new set of equipment.
I was left carrying around a mw longbow, fine strongbow and normal strongbow despite dropping the mw longbow and the fine strongbow to get some arrows during that round.
I then QQ'd and was asked to make a bug report so here it is. Not sure but it seems that no matter what you pick up, you keep for the next round regardless of whether or not it's "reset".
Cheers,
Tenne.