Yeah, I get that it's a prison and we're supposed to feel broke and poorly equipped, but it is a fact that right now weapons and armor sell for ridiculously small amounts.
It's a bit funny how you say "money being tight is fitting for a prison island" and then "go sell some paintings". Paintings should be the things selling for 2-6 gold, not weapons. No one on the island in a position to buy paintings should be interested in paying for them.
Being unable to really afford skill books leads to repetitive combat because we're stuck with the same moves for a very long time.
As for crafting, not a bad idea, but there's also not a great deal of crafting ingredients around to perform crafting with.
And as for murdering your way to profit, perhaps, just perhaps, since this is a role-playing game, we might want to occasionally roleplay people who do not steal from those prisoners who are "innocent" and who have pretty much no possessions anyway, or murder merchants for their items. Just a thought.