I don't see what would be wrong with replacing it with a "bounty" system. Each creature drops something that you can either use directly (e.g. meat you can eat) or can sell to someone else (e.g. a pelt, teeth, etc.) So you don't have the absurdity of forest monsters carrying gold pieces, but you still get a financial benefit from it (eventually.)
Progression would be solved through that same system. Creatures which are more difficult to kill would drop more valuable body parts. With dragons, it seems likely that dragon scales would be highly valuable (useful for making armor or something.) Of course, adventurers also like to go out and try to kill dragons, so perhaps if you find a dragon's lair, you will also find the bodies (and valuables) of the adventurers who tried to kill it before you.
For random loot drops, why not bodies of other adventurers/errant travelers? You'd be most likely to find these away from roads. If these fantasy worlds are really so dangerous for the unwary, they should reflect that.
I think most RPGs these days do provide consequences for looting people's houses, though.