Can I die my way through the Wasteland to get better loot?

Usually dwellers find an item once an hour, plus the items gained from succesfully completing special events. The change to get rare or legendary items is tied to the time the dweller has spent exploring.

Now when a dweller dies in the Wasteland and is revived, their HP are fully restored and they continue exploring. The counter in the exploration window continues, and in the log it also looks like while they were dead no time passed, but then the time just picks up where it left.

In fact, it looks like it's an absolute timer of how long they have been exploring while alive.

Is the drop chance affected by this? Can I effectively take a low level dweller and resurrect them until they reach the guard depot or in general a time at which legendaries have a chance to drop?

In my current vault I have long since reached the caps cap and basically can afford to max out the item limit of all explorers every time by resurrecting them until they return with a full inventory.

Yes, you can keep reviving your low level dwellers until you're happy with the loot as long as you have the cash for it