Yep - when you kill a elite pack, there's a number of items that drop, and those items all have item levels. That doesn't change regardless of MF.
Then there's a calculation that determines the "quality" of the drops, White, Blue, Yellow, Legendary/Set Item.
So when you kill an elite pack and see two level 63 ilevel blues or whites, those could have been yellow+ with more MF or just better luck.
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