I , too, do not think much of 4E treasue allocation, especially, (as with previous editions) the gold cost rapidly spirals into ludicrous territory. But, with residium actually being a material, I think there is a way to use it well. WIth residium, you can power riturals, and make magical items, possibly without even needingthe actual books, gloves, etc that the magic will imbue. I am thinking of having magical items totally made of magic, the magic crating the actual item, instead of imbuing a pre-existing magical item.
To me that helps explain the oddities of the masterwork armors, and what is the value of a +6 longsword after you pull the magic out of it. It walwo helps explain why mundane equipment is effectively worthless, if gold can hardly buy you any residium at all, or small amounts of it.
And if residium cannot be bought, the only place to get it is loot, which gives the players a good chance to be adventurers. Tha +1 sword is valuable as a souce of residum for either you or someone else, while the mundane plate can get you enough gold for the Inn, but most people handwave that anyway.
I like it because it can help seperate the gold cost for living and buying mundane things, and a residium economy that can only really be entered by those with access to it. So, instead of hundreds of platinum pieces, (I am growing to hate the platinum pieces of 4E.) you can instead put a lesser item there, or a vial or pool of actual residium the players can cart off.
Of course the conversion rate from magical items to residium needs to change. 20% is too low, but I was thinking 75% would work well. It is a high tax to converting items, so people will not be converting willy-nillly, but still it is possible to use a few lower level items to make a better one. So 2 or 3-1 or so, instead of 7-1 like it is now.
So the DM can still hand out gold, but on a level that is mostly daily-living level, and keep residum or magical items high enough to keep the level of wealth they want, and as an added bonus, can hand out more random items. With a 20% conversion rate, unneeded items are a real burn, but at 75%, they could be a lot more useful.
Ideas?