Running Software (issues missing this information will be deleted):

• Addon version: 9.0.1
• Server patch: 9.0.1

Have you read the changelog? (please don't waste our time)
yes

Describe the bug
For example if I have ilvl 66 (BFA) equipped for a slot and 38 ilvl drops from an old WOTLK dungeon, addon does not recognize that as "low" enough and doesn't auto-sell anything

Looking at the existing logic with magic ratio numbers, it may be worth to simplify it. If an item is from an ilvl bracket that corresponds to an earlier expansion than the equipped one, make it eligible for deletion.
There were problems before squish where it would try to sell a current expansion item which was significantly lower ilvl, but it was still useful. You have no reason to wear an old expansion item since they stop working anyway