This is very clever! It really seems you can accomplish just about anything using letter and word assignment. As for the mind palace thing, before I even finished reading that paragraph, I was thinking of asking you to include a guide to that. I think it could make for a great optional "hub world" or "main menu" for this game, or act as a sort of mental space you play the game in. I've never learned the formal methods to make a mind palace, but I'd love to! I know it takes more effort, but to be fair, I think most people playing this game are willing to put it in, but I can see that it wouldn't hurt to make it optional and not make core mechanics totally rely on it.
Pretty much any idea you suggest, I'm going to want to hear about.