The backpack works, but it doesn't really address the issue so much as offer a very mild palitative effect, similar to maybe half an extra locker slot.
I openly admit to hacking my game to get all 9 locker slots (hee-hee according to the PMs I got from dislekcia this was causing some seriously weird error reports, sorry about that and thanks for being so chill about it). Even at the full 9 slots, locker space is a serious deterrent to trying new things and has pretty much removed incentive to experiment with things like the Cauldron or the new Orb of Zot. Part of it is having to scum for the new item, and part of it is the knowledge that I will have to scum again when the experiment is over and I want to restore my old item. I cannot imagine playing with 4-6 slots, which is what most people dpo.
I understand and respect that locker space was designed as a limited resource and I think it does play a meaningful role during kingdom development, but once you've unlocked everything and have overthrown Horatio, it stops being fun and starts being a chore. I haven't offered any concrete suggestion for reconciling the current design with the gameplay realities of the endgame because I respect your creative abilities. But since we're on the topic, here's an idea that might work and also sounds fun and exciting to me as a player:
After 'winning' the game, the Kingdom creates a vault (better yet, Packmaster descends from the heavens and blesses your kingdom with said vault). It starts out with few or possibly even no slots available. You can earn the right to purchase new slots by accomplishing difficult endgame benchmarks. Maybe you get a slot for every 3-4 classes that beat a Vicious dungeon. Maybe you get one for every dungeon that you 100%. Or maybe you get slots for doing both.
Once you've vaulted an item, you own it forever. Items in the vault can't be prepped, but for a nominal fee (say 100 gold) your hardworking engineers will create a copy of the vaulted item that can be lockered normally.
This kind of set up would address several things that players have been wanting for the late game.
1) We get a fun and interesting incentive for doing difficult completionist stuff.
2) We remove the time tax on experimenting with new items
3) It leaves the existing locker system intact and doesn't interfere with kingdom development as it already exists.