Thanks so much for the feedback, I really appreciate it! It's always interesting to see where people take the setting whenever I run this and that openness is a huge part of the fun. I also love drawing in games, and having those artifacts left over as a sort of memorabilia of the story we made.
The fun of treasure should be in describing the non living aspects of the world, they are in charge of describing and answering questions about buildings, locations, and scenery. Also making up items and treasure can be fun. I have seen people struggle with the role and it might not be for everyone, but once you get the hang of it, interjecting description of objects and location in the middle of a scene can really help build atmosphere and immersion, even affect and inform the choices characters are making. Sensory description can also help (you smell burning, you feel the cold prickle of snowflakes landing on your nose, and so forth).
In battle scenes the strong move for treasure is to give the players something to interact with, some sort of action set piece, like a forbidden temple with strange trap mechanisms, a steep hill full of loose boulders over a deep chasm, or a damaged airship losing altitude. Ideally asking of questions should drive a lot of this, so The Warrior might ask Treasure, "What's the fastest way out of here?" and Treasure could respond "You see a rope tied to giant chandelier, you could cut the rope and swing on it."
There's also a rules variant on page 20 for a three player game, where treasure and allies are controlled by the same player. But I'd be interested in seeing if your hack works better, letting people take on treasure as needed might be an improvement.
I do sometimes feel like dropping some of the pretense of trying to emulate a videogame RPG would make this game work more smoothly, by further simplifying some of the crunch and making it more purely narrative focused, so I feel you there. Maybe some later version of it will end up going in that direction, if I get around to revising it and doing another printing...
Again, I really appreciate you taking the time to read and give me some feedback. If you run the game I'd love to hear how it goes. You're the best!