I am also for making monsters drop items for adventurers rather than money or anything else for cities/armies. That would be a simple way of rewarding adventuring types without ruining things for army/city types.
End of ArcaneBoozery's quote
Thing is, you could just sell those items for gold - a lot of gold, remember how absurdly valuable champion gear is compared to what cities can generate? That's the whole problem, monsters have to drop tons of gold, or items worth tons of gold, else how would you ever outfit a champion? First reduce monster gold drops/cost of champion gear to be on the same scale as city gold generation and building/training costs. Then you can replace monster gold drops with equally valuable items if you like, it wouldn't hurt - more believable for a spider to drop a breastplate from a guy he ate than a sack of gold, I suppose - but in the end you'll probably end up selling most of the items and buying the best ones the shop has.
Plus trained unit gear should depend less on gold and more on materials/metal/crystal, there just isn't much demand for that stuff currently, gold is usually the bottleneck. You are supposed to be producing that gear yourself after all, not buying it out of a shop - but that's another discussion.