Green items are dropped by the SF/GF Bosses. They are new weapons, and seem to be the new "Gold" since it's much easier for players to get Gold items.
Fortunately, however, you won't see LA traders now spouting "WTS Godly GREEN blahblahblah" as green items can be obtained by anyone who participates in killing a GF/SF boss. They are still more valuable and more sought after than Gold, but as almost anyone can obtain Green items from the same places, there will be a fair number of them about, and players trying to sell them for 500k will be very quickly disappointed.
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