The memory room is great and I look forward to its final version.
I don't know if I like taking away the chance to get a special gear upgrade (it can be really neat when you find it at a level appropriate time) but I understand if that's the best solution. Regardless, I agree with the suggestion to make drops obtained by the memory room sell for 1 gold.
For a completely different approach, what if memory room bosses gave you no drops or XP and instead you got a score related to how well you did (how fast, were you hurt, etc.). Then you get a one-time award based on the their you attain plus everything below it (so you don't have to artificially play badly if you put it off a long time). This could provide some reason to fight bosses once you've upgraded your gear and skills (so you could get higher ranks and get the special item). I don't know if this is a good idea, just thinking out loud.