The loot of the weekly chest is based on the highest instance you finished, it does not matter wether or not it was inside the time limit (Source: I have tried it — multiple times in fact).
Blizzards preview is worded slightly misleading in that way.
After completing any Mythic Keystone dungeon within the time limit (whether using your own Keystone or someone else’s), a reward chest will be available in your Class Hall the following week. That chest contains a guaranteed piece of gear with a power level reflecting the highest Mythic level you completed during the prior week, up to a maximum of item level 880 for a successful Mythic Level 10 clear.
I am not sure if you get a chest if the only instance you ran that week was not in the time limit. but the above suggests that you need to complete any (even only a M+2) instance within the time limit for the chest to appear. But the item level is definitely based on the highest instance you finished, however long it took.