World-of-warcraft – Does Heirlooms yield the XP bonus when the level range is exceeded

What used to be the minimum required skill to fish in any given area is now the minimum required skill to not catch any junk. Once you meet or exceed this minimum for a zone, whether natively, or through the use of equipment, buffs and consumables, you will no longer catch ANY junk. If you are below this skill level, the chance of catching junk is proportional to just how far below it you are. The further below the threshold, the more junk you'll catch.

The exact formula for the chance of catching a fish when your skill is below the threshold is ((current skill/threshold skill)^2).

For example, the Dalaran Fountain has a no-junk skill of 525. As we can see in @GreatBigFish's answer, this junk threshold is above the (unbuffed) WOTLK maximum skill of 450. Fishing at max skill in Dalaran with no lure would yield a 'fish' roughly 73% of the time. The other 27% of the time, you will catch one of the 13 'junk' items found around the world, all of which vendor for mere copper. To never catch junk in Dalaran, you'd need to use a +75 lure or better at 450 skill.

There is one notable exception to this rule: You will never catch junk in a pool. Fishing from pools gives a 100% catch rate on whatever type of fish spawns in that pool. This has caused many to claim that actively leveling fishing skill is now pointless because it provides little practical benefit - fishing from pools is always more efficient anyway.

For more information, El's Anglin' provides a tremendous resource on the subject of fishing.

My suggestion, rather than purchasing greens off the Auction House, would be to head out to Mount Hyjal or one of the Cataclysm zones and start doing quests in there. The quest rewards in those zones are greens with an item level around 272 (I just called up a random sample in Wowhead). That would not only give you XP but also increase your item level pretty quickly. A 70 point jump in item level per slot will provide a definite increase to your average item level.