You can drop items in the shrine room for later use, if you start to get full with inventory, such as item components, etc. Use a portal to head back, drop what you dont' want to carry then leave. For the most part with 7 characters, you should have plenty of carry room in your inventory without needing to drop stuff.
Jewels have noted levels of boosts depending on the level of the jewel. usually its Jewel level +1 x 3. Thus a level 10 jewel has 11x3 boosts, or 33 total. It can be a combo of strength or dexterity (in levels of 3) totaling 33. So 33 dex jewel, or a 33 strength jewel, or 30 strength and 3 dex, etc. The highest jewel is a level 17 DEMON MAGATAMA level 17 (which has 54 stat boost.
Cases have vitality. The highest Case is a level 20 DEMON INRO with 36 vitality boost.
Prayer beads are more complex since they factor in resistances and/or Ki boost, KI boosts are more "expensive" in the factor. With resistances the strongest is a level 24 DEMON SHINJYU with 78 total resists, OR 65 Ki, or a combo of the 2.
Talismans give charisma and good boosts. Each enhancement gives either +5 charisma, or +10% gold boost, or a combo of the 2. The highest level 18 DEMON HAMAFUDA gives 15 enchantment, for +75 charisma, +150% gold boost, or a combo of the 2. Of course give your Leader the highest charisma Talisman to help with prices, and everyone with the highest gold boosts that you can find.
As noted, DEMON items are the highest form, usually its Ancient, Noble, then Demon items in terms of strength.
Masks have level +2 x5 boosts in terms of resistances and damage reflection. A level 10 mask has 12x5 boosts. The strongest mask the O-JISHI is level 22, has 24x5 boosts, so can have 120 resists, 120% reflection (probably caps at 100%) or a combination of the 2. Always keep high level damage reflection masks for characters that later will get max elemental resists with gear, then the high level reflection mask will be a benefit.
In the game monster strength, chance for better loot, etc is determined by the area you are in, not your level. Levels 1-6 strength. Level 1 is your starting castle and wilderness. The next castle is level 2, the 3rd level 3, and the last castle level 4. The mountain side is level 5, and the final warlords citadel is level 6.
You get 3 personal quests per game, based on which clan you play. 12 total personal quests for the 4 clans.
Monsters killed have a chance to drop 2 items of loot max, level and items depend on the monster. Some noted monsters that drop components that you might want to farm. HAIRPINS from female casters very very rare maybe a .5% chance to drop. Really have to farm hard to get them. Gold soul shards, female ninjas (with circular blades) and some fallen/evil wizards, a few others. Yama-inu blood (for mana leech armor) from wolf enemies.