Since the spark/CE change, we have this problem: Every knight in the party must personally go pickup any coins and materials dropped. Everyone will get the full amount, provided that you spend the time to cover every inch of the level and your teammates wait for you to do so.
Before that change, any one knight moving close to the loot will pick them up for everyone, with the coins duplicated for everyone and materials randomly allocated.
With the spark change, knights lying on the ground won't get the loot. Or they revive with emergency/arsenal spark and have everyone else wait for them to grab the loot. This introduced a penalty for dying.
But that also makes playing with a group a drag. You cannot split up to handle different branches of the level, or someone would have to get less loot or all will have to wait as others go back and cover the whole level (provided the loot haven't disappear already).
It forces everyone to stick together, even when the level layout makes it logical to split up for speed (branching clockwork levels, deconstruction levels, graveyards, FSC 2nd level, etc.).
So here's my suggestion:
Coins and materials should be collected for the whole party when one knight moves near it. But if a knight is down at the moment, his share would not go into his arsenal, instead it goes into a separate cache. If the dead knight revives, this cache gets transferred into his arsenal. If he remains dead when the party leaves the level, this separate cache is discarded.
So there you have it... OOO keeps the penalty for dying, we get rid of an annoyance of not being able to split up, having to cover every inch of the level and wait for others.
As for health packs, vials, pills and minerals will remain as is, knights must pick them up personally. OOO removed item dropping probably to prevent us from accumulating pills.
I think the better solution is not blocking us from dropping items; it kills co-operation. If you don't want us to start an arena fight with a dozen of pills, the logical solution would be to remove items on the ground when you step on a group button.
instanced loot was put in place to prevent alt-dragging. people backtracked anyway with shared loot for leftover pills and vials, so it's not a big deal at all.
your examples for branching paths are a bit weak. clockwork branching paths lead to goodies, there is always only one way to the elevator, and everyone even when shared loot was a thing got into the branching paths before going for the party button/elevator. in the case of more than two branching paths, one leads to the elevator/party button, one to minerals and one/two to boxes, so you pretty much have to go to them anyway for items and goodies.
FSC's charred court is the only instance of 6 branching paths, and only one instance can be tolerated IMO. if you disagree, remember that you pretty much had to backtrack there anyway for pills and such, and the only loot you are missing are three zombies worth of loot in one of the paths.
all in all, I think the system in place works fine as it is.
your solution for accumulating pills is good though.