Sorry, KM, but by now I really wonder what kind of rust monster encounters you had in your past to make such statements. Care to elucidate a little on that statement? Since when is there no other way to recover from a lost sword than to run back to town? And since when does a lost sword mean the adventure is over? What kind of player stands up after he loses his weapon, armor or shield and drops out of the adventure? What fighter/cleric/ranger/paladin is so totally useless that he quits the adventure because he lost his sword/mace/shield/armor because he cannot do anything without it?
"I strike at the vile beast with the great axe of my dwarven fathers, soaked in the blood of a thousand orcs!"
"Reflex save"
"Uh....I'm a fighter so....12"
"It dissolves into pitted rust as it strikes the creature's carapace."
"It....what? My ancestral axe? It doesn't deal damage or attempt to sunder or..."
"It dissolves. That's what the reflex save was for."
"Oh. Well, that sucks, and you suck for using it. You suck long and hard."
"It'll be an interesting character challenge."
"No, an interesting character challenge would have been soaking it in the blood of a thousand MORE orcs, not watching a cockamaroach eat it. You suck."
OR
"This legendary greatsword was forged from a meteor by a master gnomish smith, weighted and sized for a creature twice is size! Surely it can slay this beast!"
"Reflex save"
"Uh...I'm a fighter, so.....15"
"It dissolves into pitted rust as it strikes the creature's carapace."
"But....it's forged of a meteor!"
"It dissolves."
"You son of a.....how long is it going to take me to get this back?!"
"Well, you'll need to find another one of those exceptionally rare meteors, another master gnomish smith...and the gnomes are extinct now."
"Screw you!"
"Trust me, there's repayment in the treasure."
"Yes, but I DREW my character with the meteor-sword, all gray-green and savage. It was COOL."
"Less complaining, more rolling dice!"
"Yeah, I think I have to work next weekend....not that I'll be missing more than you killing us now that you're going to eat all our equipment."
OR
"It touches your armor with it's antennae, and the ornate suit collapses into fine red particles."
"I just GOT that suit!"
"...and?"
"That's the suit of magical full plate I've been saving since level 1 for! I scrimp, I save, I go without healing potions...we had to travel to the capital city to get it after it was specially made for me!"
"And now it's rust."
"Screw you!"
"Not my call, man, that's the way they work."
"I break it's effin' neck."
"It dies without complaint."
"Wait, that was it?"
"Yes."
"So you're telling me, the entire purpose of that encounter, with it's 3 points of damage and piddly hp critter, was to destroy my armor that I had saved since level 1 to get?"
"Uhm...I guess that's how it worked out, eh?"
"Why the hell did you let me get it if you were just going to take it away?"
"The dice just fell..."
"BS, you knew that thing was going to HIT the party TANK. What's your problem?"
"What if this treasure has a new one?"
"I didn't WORK for this one. Jackarse."
OR
"FINALLY. Now that it's dead, we need to head into town and get our stuff back."
"But what about the mayor's daughter who is held captive under here?"
"Is she now? Well, she just cost us 3k. She'll have to wait."
"But what if she's executed?"
"Whatever's going to execute her could do the same thing to us. Three times to me with my AC."
"You may fail your mission!"
"Well, sometimes the bad guys win. I'm not facing that legendary orc warlord in my underpants with my bare fists. Besides, the old codger's only paying us 800 GP anyway. We should charge him for these expenses."
"He can't afford that!"
"He should've thought about that before signing our contract. Anyway, we head back into town and re-fuel for free."
"Actually, you can't even do that, the GP limit of this town is only 200 GP."
"So we can't buy new weapons and armor? Can we make some? From your bones?"
"Maybe you'd prefer to DM?"
"Nah, screw this. Life's to short to argue about imaginary armor. I'ma go play some WoW now."
And that's just a quick survey of what could happen.