I really don't understand all this whinning about the loot - I fed him Necromancy of Thay and The Iron Flask - none of those even felt like a sacrifice.
And by the time he'll want the third I'll have plenty of blues we'll grow out of so... Other than keeping a pouch of blue junk named "Gale feed" I don't really see the problem.
Also apart from The Sword of Justice none of them is really that awesome to begin with
We don't know yet the frequency of it and what will happen if we don't.
I don't mind it necessarily but on my first playthrough at least I like to use the gear I find, especially since you won't know where to find it.