What if there was an option the mentor could toggle to let them completely forego ALL share of loot, rewards, and other drops of ANY kind in return for having elevator costs of 0 while mentoring?

That way they wouldn't have to go "Oh sorry, man, I really wanted to help you tackle this dungeon but I just used all of my energy for the day so... ... have fun in the graveyard by yourself!" :-p

Plus it'd let the newcomer keep all of the materials while still having someone to pal around with.

Actually, on second thought... what if there was an optional option (emphasis on optional in case anyone out there doesn't get the definition of "option", as people so frequently complain about the option of spending some money in the game. :P ) to remove the mentor an additional step from the game... they'd be there in the levels, but they could be floating around on a little ship/helicopter/jetpack, unable to help the ment-ee with the fighting (because they'll probably learn best doing it themselves) while still being able to keep an eye on them, and having the freedom to sit there and chat at them without getting mauled to an embarassing death by T1 critters. Naturally, they would also have some sort of ability to place MARKERS at any point they choose. Arrows pointing a specific way, a little "attack this!" symbol..

And if flying around overhead is a little too hokey, they could just be watching invisibly, "from a control room somewhere", and their chat could come in a separate bubble from the normal chat with accompanying head-shot to denote it's importance. But still with the ability to place holographic markers and whatnot.

I think this is a great idea, but I don't know if you even need rewards as an incentive, at least not gameplay-influencing ones like free lifts; always be wary of people who get into teaching for the money, you know?

Personally, if I'm doing certain sequences - the Snarbolax fight, the Jelly Palace run-up to the Jelly King fight, T2 Graveyards and so on - I'll make a point of asking the other party members if they've done this before, particularly if they seem underequipped at all. If they haven't, or haven't successfully (there are probably still more people who've reached the JK than have beaten the JK), I'll briefly outline pertinent strategies. I don't do this for rewards, or even thanks, but because it makes the game better; new players making classic newbie mistakes is frustrating for the more experienced players (because they know how this is meant to go dammit what is wrong with you) and the newbies alike (because it's often costing them EN to revive, reducing their available playtime and artificially stretching the learning curve as a result). When everyone knows what they're doing, everyone has more fun.

Of course, if you're opting into a game-wide mentoring programme, rather than just offering help spontaneously, maybe there should be some reward - but I think they should either be fairly ephemeral (costume armour pieces, for example) or tied directly to performance (awarding prizes based on feedback from mentored players). The former might help deter players who'd sign up just for rare equipment or free dungeoneering, the latter could help undermine attempts at abuse by making sure that only useful instruction is rewarded.

I wouldn't mind helping a newbie out with the game. And maybe you could choose whether to join them in regular or mentor mode. In regular mode basically play like a party with them but in mentor mode you don't get any or minimal drops (they still do) and can switch between active mode(where you fight and take damage and can rev them) and inactive mode where you cant help them at all aside from advise and pointing out problems but don't take damage. Active and inactive mode can be switched at any time in the main menu under mentor but you can only switch between regular and mentor mode at the end of a level at the gate.

Mentorship is basically provided in Guilds, so choose wisely which guild you join =)