Yes - there are magic items. They will let you do things to the forums that you currently cannot do.
Paper dolls will be a challenge but it was in the original scope of the site design we did. More likely at this point we will use the space under your avatar, as you mentioned, to allow you to display your loot.
With regards earning gold, there are several factors affecting this. Mostly it is to do with posting in the forums. Different forums will award a different amount of points. Also you get points for start points, replying to posts and also in some cases you can get points for starting a post that others reply to.
In addition it is tied into the Karma system so positive karma will give you gold and negative karma will take it away.
Also, if you are a Patron you generate twice the gold as everyone else for every action
I'll give you a full run down when everything is in place and I am turning it loose.
What do you think?