If i click on initialize items for a said zone the items appear in the items screen, if i do this again for another zone they appear as well, but all mixed in with the other items, is there a way to view items that are for a specific zone, filtering out the zones you do not wish to see, and this might be a n00b thing, but how do i know what class uses what.

All the items are interwoven, and it doesn't differentiate in the list, unfortunately.

As for the class priority, that's a box so that you can say which classed have priorities of which items. What you put in there is up to you. For example, you could say that the Mageblade can only go to Warlocks and Mages, Or you could say that all Casters could use it