I imagine you would need to start with a database of equipment. You need to know what equipment is available to the players and how much their stats can be affected by them.
A seemingly daunting task at first, depending on how much gear you have in the MUD.
So break it into manageable chunks and delegate to your builders. (in my case that would be just me haha!)
Use OLIST and find all your equipment - lets say weapons.
'OLIST type 5' on stock tbaMUD gives 27 pages of weapons, providing their average damage - not a bad start.
Of course this gear is not available to all players immediately so you'd want to further refine your list to show what a "powerlevel 1200" player could get their hands on. Depending how you restrict this in your MUD will dictate the best way.
(For example I might re-code OLIST to show the level requirement as well as damage)
Then I know what weapons exist for each level of player and how much average damage they do. Now as I write this I'm thinking you'd also need to know if these weapons improve 'Powerlevel' or 'Strength' - is average damage taking this into account?
The end result should be that you now know what weapons a player can have at any point in their development and thereby what sort of damage potential they have.
Do the same thing for your other wear slots - head, chest, rings, etc. No doubt you will find items with +stats that will shift your data ranges.
As you complete your database you should build a more complete picture of player stats.
With this information you can begin balancing, according to how close the encounters should be. You will likely need to create some balance guidleines for your builders as to what is appropriate to create in their zones. If you are random generating (hence magicfind stat?) then you as a coder can control what bonuses are available. Like a +5 armor might be great for starting players, but worthless for more powerful players - depends how armor is used in the code.
JTP talked about finding out how armored you would want a level 1-10 character to be, and divide that out into the available wear slots. Apply that to your MUD by powerlevel for example. You still need to know what that armor number is, from baseline testing.
Example Idea:
Lets pick powerlevel 1200. From your testing you know that having 'armor 50' (I picked an arbitrary number!) gives a mid-range level of protection.
You might go for a system than has 4 different armor 'sets' for each powerlevel.
Set 1 is pretty much rubbish - low cost, easy to acquire, gives '40 armor' which is less than your baseline of 50 - but better than nothing.
Set 2 is the normal set providing your baseline armor for that level - '50 armor'
Set 3 is better than normal, giving slightly higher armor for powerlevel 1200 - '60 armor'
Set 4 is legendary, rare and expensive, giving much better armor than would be expected at that level - '70 armor'
Now we know that a powerlevel 1200 player could have armor ranging from 40 - 70, (even if they are mixing and matching pieces from each set) allowing us to balance our mobs and encounters accordingly.
Liko - depending on if your MUD is live and has active players it might be easier to wipe all objects and start from scratch with a planned out approach like this, keeping tight control over what equipment your staff can build in their zones.