I'm spending more on rearming then I am recouping from the mission rewards and salvaging.
How much are you spending on rearming? I'm assuming that the repair is much less.
It depends on the weapon. I've had rearming bills for ~300 000 when I was still at renown ~30. I eventually figured out that it was my lancemates firing off all the Hurricane Missiles in the Corriach I had captured, so I swapped them for a less effective but cheaper to fire weapon.
Edit- I've just committed today's changes, for anyone who wants to try them out right away.
Phil- Let's see how this works out first, then go from there. The reason why I chose this method for rebalancing salvage is that it was easy. If it's no good, we can try something else.
I think the main reason people (e.g. me) are squawking is because this breaks the basic roguelike mechanic of "kill things, take their stuff back to the store and sell it to pay for resupplying". In a way, though, it was already partly broken in gearhead: since you go back to the store after pretty much every battle to reload, and there's no hard limit to what you can carry, there's no reason ever to leave something on the battlefield. So you might as well haul it all back to the store, almost no matter how little they pay you for it. (And they were already ripping you off by paying you something like a tenth the buy price.) Add to this the fact that you can (or could, in GH1) gain general experience by repairing damaged hardware, and there's a pretty strong incentive to scavenge everything you can from the battlefield.
In Nethack, stores are rare and money is not all that useful, so you don't usually bother hauling everything you find back to the store to sell unless there's something you desperately need to buy there. In Angband, stores and money are more useful, but you have very limited carrying capacity, so you have to pick and choose only the omst valuable items to haul back and sell. The author of Crawl decided this mechanic was boring and made the slat-out rule that stores don't buy, so there's no reason to pick something up unless you're going to use it.
For GearHead, the question is, should people be hauling all the battlefield scrap back to the store to sell? Is that a good mechanic for the game?
If the answer is yes, then the game could be balanced to accomodate that - mission cash rewards reduced, no-salvage missions given some in-game justification and some appropriate reward (e.g. a new mech, though maybe of no better quality than what you fought), and so on. (This would include better rewards for personal-scale missions, necessarily.) I don't really see how to force a nethack- or angband-like pick-and-choose mechanic, given the extremely tight weight limits on customized mecha and the frequent returns to the store.
If the answer is no, then something fairly drastic has to be done. Giving no, or virtually no, money for salvage has the effect of still allowing users to scavenge useful parts, while discouraging them from grabbing everything. Making less loot available would be even more radical, but would force users to prowl the stores hoping to find one that sells a Savin, or worse, some random junky mech that happens to have that cool weight-reduced railgun you're looking for. The only problem I see with this is in-game explanations. If I have two identical railguns, completely repaired, which function identically, why is some dirty black-marketeer going to care that one of them came off a destroyed mech and offer me a tenth the money for it?
In practice, I find that with the new modifications I often just look around the battlefield at the wrecks, and if it's all familiar types of mech I just leave them there. This makes battles much quicker, so that even though I make a lot less money per battle (1.25 times the old reward instead of 2-3 times) I fight more battles. It does mean that reloads and repairs are more of an issue - an expensive weapon gets a lot more expensive if the reward per battle goes down.