FailedSave (the author of that guide) here, thanks for reading!
My understanding of that pin item is that it AI Dungeon has a certain amount of text it’s going to feed into the model at every step. The pin item doesn’t increase that size. The contents of the pin item take first priority, but they go at the “back” of the text block. So the disadvantages of using it are that you get less of the story fed in, and if you have a particular style you use for the pin item (short choppy sentences, say) that affects the style of the output as well. So adding more pin items is the same difficulty as adding any other amount of input.
(The AI also happens to think things in the pin item are relevant, so if a “new” character gets introduced or mentioned, they may get a name that’s used in the pin item.)
I’m sure others here, and probably gwern in particular, have a better understanding of both GPT-3 and how the game interacts with it; I’m curious to know how close my understanding of the system matches what’s actually going on.
To engage more directly with what you’re suggesting: You seem to be suggesting that the AI could read text, figure out the most important part, and feed it to itself to improve further outputs. Without a highly supervised step that not only figures out the most important part but optimizes it to be used effectively by the AI, I don’t think that would be effective. Already the AI tends to get “stuck”—to pick up on a particular phrase or pattern as very important and keep repeating it—in situations what that’s unexpected or unwanted.