My thoughts on XP for GP aside (it's stupid), any discussion of 1e should stay VERY FAR AWAY from the idea of "living dungeon design".
1e adventures did NOT have living dungeon design. It had a warren of goblins living three minutes walk away from a crypt of skeletons in one direction and a three minutes walk from a cave with a sleeping but angry 7HD cave bear in the other direction. It had goblin leaders going into battle with leather armor and a rusty short sword who had left behind a +2 mace of disintegration hiding under his bunk. It literally had people standing around in designated spots on the map WAITING for a group of adventurers to come by so that they could unleash whatever trap they were waiting to unleash.
Saying "OK we killed all the living things in the dungeon so now we take a week or two to loot and pillage every spare copper piece from the place using our wagon train of followers" is actually MORE realistic to me than any of the above dungeon design ideas.
1e adventures did NOT have living dungeon design - that's not a statement you can make. You can say "SOME 1e adventures..." but you can't say that none of them did. You also can't say that the ones that didn't weren't made living by their DMs, because I know many who did just that - according to the rules printed at the time.
It had goblin leaders going into battle with leather armor and a rusty short sword who had left behind a +2 mace of disintegration hiding under his bunk. It literally had people standing around in designated spots on the map WAITING for a group of adventurers to come by so that they could unleash whatever trap they were waiting to unleash. - that's a DMs decision to make. I don't recall a single instance of a module forbidding, or even stating, that a monster couldn't make use of an item it had on it's person, or that it was unable to use any item associated with it.
Yeah, there were items sitting in treasure chests that could've been used, yeah I know that's happened. But is it the monsters fault they didn't get enough warning to run over, disarm the trap, unlock the chest, and start using a weapon they may not have been proficient with, or might've been a sacred artifact they were forbidden to use? Does it matter? Was the encounter designed to be challenging to the party without the inclusion of that item? If it wasn't challenging enough, I guess the DM should've used his perogative and added that item to the monster.
I do recall many instances where the party groaned every time an opponent used a magic item with charges against us - not because of any damage or effects we suffered - but because the item had fewer charges when it became ours.