This interesting approach to overhauling treasure types has gotten me thinking about the subject of treasure and how it's supposed to work in D&D. I think treasure has a six-fold function in D&D and any revised treasure system needs to take all six factors into account.
1.) The abstract concept of treasure appeals directly to the players, by tickling their normal greedy impulses. This goes back to my thinking that D&D is about providing an acceptable venue for expressing one's less civilized urges. I.e. if a scenario doesn't invoke at least one of the Seven Deadly Sins, you may need to rework the premise. Greed is one of the easiest ones to work with in D&D thanks to all the gold pieces lying about the dungeons.
3.) A big pile of treasure provides an additional logistical challenge. You only get to spend gold pieces that make it back to town and I only allow xp to be score for treasure brought out of the dungeon. Most everyone here hates dealing with encumbrance rules. Me, too. Instead of totally ignoring or simplifying the rules another perfectly viable alternative: only be a dick about encumbrance when the players are trying to haul craploads of treasure out of the dungeon. Suddenly they'll realize that mules and hirelings are a good idea. (Enforcing the encumbrance rules is also great when they're trying to get a fallen comrade to treatment. Especially if the casualty has been petrified and weighs a few hundred pounds more than usual.)
4.) Treasure can lead to interesting inter-party tension. One mistake lazy DMs (including me) make is allowing the players to value everything in gold pieces and then divide the total so that everyone gets an even share. Forget that crap. That's far too easy. Instead, after a haul get in the habit of asking players "Okay, which of you took the silver cup and which took the pearl necklace?" Some smart guy will pipe up "Can't we just sell that stuff in town?" Sure, you can. But at what percentage of the total value? 50%? d100%? Maybe you only score xp for the sales price of cashed out items, so keeping those items is worth more points. Suddenly who gets what matters a lot more.
5.) Good treasure leads to further roleplaying opportunities. Long ago one of my PCs knew an adventurer named Amber. She was a kinky girl who dressed in skimpy leather armor and specialized in using a bullwhip in combat. I'm going to surprise you now: Amber was not played by a dude. Anyway Amber's player insisted that every time gems came up on the treasure charts that we had to roll to see what kind of stone they were. Because of her PC's name she claimed all the ambers and any other yellowish gems. I once played a ranger who built himself a cabin on the edge of town. He gladly scooped up ordinary household goods (pots, pans, cups, chairs, etc.) while his buddy the swashbuckler took his share in coinage, which he used to have stuff custom-made for his swank mansion. Long story short, who gets what treasure should be a roleplaying decision beyond "the fighter gets the magic sword, the wizard gets the wand".
6.) Treasure can lead to further adventures. The treasure map is an obvious example, as are "gotta catch 'em all" treasures of the Rod of Seven Parts variety. Or what about a Ring of Invisibility that has a strange inscription on the inside? Or imagine a painting, a well executed portrait of a long-dead king on his throne. For a long time it just hangs on the wall at the PC's house until the day arrives that he has an audience with the current king in the same room as depicted in the painting. Only where there was a door in the painting a tapestry now hangs. Why is the current king concealing that door?
Progress Update: Infernals
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