I believe act 3 wipes the internal game memory clean of all the corpses and items littering the world. Pretty clear that this issue is related to the memory growth of keeping track of all the stuff since it gets worse over time.

It doesn't happen in single player, so I suspect there's a piece of crap code running a "cleanup" check or something on character switch in multiplayer split screen. Given it doesn't happen in single player this should be pretty straightforward to debug.

Happy to offer my own services here free of charge if anyone at Larian would like to pay attention to this. I do this kind of debug for a living. PLEASE let me help to make this wonderful game playable again with my wife!