I noticed when fiddling around with some code, that the ItemStack can't be changed in an ItemPickupEvent.

Test code:

@EventHandler
private void onDrop(EntityPickupItemEvent event) {
    Item item = event.getItem();
    item.setItemStack(new ItemStack(Material.DIAMOND));
}

When this is fired, nothing happens.
Digging thru the code where this event is called, I noticed there's a local field for ItemStack. At the beginning of the pickup method, the field is set and never updated after the events.

Including a tester plugin if you wish to test.
All you need to do is drop any item, and attempt to pick it up, it SHOULD be changed to a DIAMOND but it is not.

I'm going to work on a PR that can fix this issue.