Level of crafted and gambled items in low-level game

Level of crafted and gambled items in low-level game - Man in White Shirt and Black Hat Holding Deck of Cards

It is said that if you were a level 12 and created a game, all items that you would get are items with a base level of 12 and below.
If I brought a level 70 character into that game, would upgrading a level 70, we could say, ceremonial knife through Kanai's cube make it into a legendary with a base level of 12 and below?
Secondly, will the items that I would get from kadala be level 70 or level 12?

Please correct me if that assumption is wrong, if not then answer the two questions I had just stated. Thank you!






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Level of crafted and gambled items in low-level game - A Person Picking a Gaming Card
Level of crafted and gambled items in low-level game - Attentive Asian joiner leveling timber on planer in workshop
Level of crafted and gambled items in low-level game - Blue and yellow ball on green grass





Expensive and rare low level items in Diablo 2




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