On the matter of magical object proliferation, I suggest two “monsters” from our campaign, based in the mythical Freeport. You could buy anything in Freeport, except Thionite, and slaves. Everything cost four times what was in the book. They would buy anything useful for half book. So, as you might imagine, thrift being notably rare among player characters, everyone had lots of loot. Then one day, a group of adventurers came back from a very old dungeon, from which they brought a large number of really cool magical items. Trading and selling disbursed them into the pc and npc populations rapidly. But, one day, a guy in a bar pulled out the Wand of Pnoth, and tried to cast a push spell on a friend’s drink, and the wand crumbled to dust, after filling the air with a ten foot globe of fine white powder. The bar was a popular hangout for wizards, and was packed at the time. The incidence of such catastrophic failure was fairly low at first, but over a year or so, they became commonplace.
Turns out the items in the original cache were infected with “white mold.” It is a very pernicious growth, caused, or at least enhanced by the presence of multiple high level enchanted objects in proximity. The mold has no effect until it reaches a critical level of development, and then it uses all the magical energy of the object to create a cloud of spores, and dimension door them into the space around it. Any object within the radius (ten feet per level of the enchanted object which spores) is very likely to be infected. There is no known way to tell if your item is infected, or to reverse the effect. Legendary objects get a saving throw, but no adjustments are allowed. (Save vs magic as the magician or cleric who created it.) In addition, multiple infections greatly increase the speed of the infection, causing large number of items in proximity to occasionally cascade in explosive fashion. (The Freeport Magician’s Guild Shoppe was tragically driven out of business in a single night.)
And then there was the infamous Valley of the Dragons. A dozen parties went through it, on their way through the Mountains of Despair, a favorite route to the realm of Kaelborough, of which the less said, the better. Thing is, no one ever saw any dragons, except once, and those were oddly only pony sized, and herbivorous. (Although the were annoying, and fairly hard to kill, having absurd armor class, and ludicrous hit points. Fortunately, they were stupid, too.) But the Players never could figure out how they kept loosing their gear. At times the loss became frightful, with packs and all leather items disappearing overnight, or all metal or all gems, or some other simple single characteristic. Turns out the dragons of the valley come in all sizes, including microscopic. They have random levels of intelligence as well, from bug stupid, to spell casting brilliant. They also eat one thing from a list. Metal, crystal, etc. and are either attracted to, or repelled by magical auras. The wrong combination and the tiny little buggers will eat your whole spell book, or your wands, or your armor. After a while, though, folks pretty much stayed out of the valley, even though no party ever encountered carnivorous dragons, which were on the list. We thought of having them swarm, but never got around to it. By that time, the level of magical loot had dropped down to more reasonable levels. (And costs went to eight times book for magic stuff of any sort.)
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