Starting from scratch between quest books doesn't make sense unless you literally have a brand new character (died last time). Even so, if anyone in the party has played before they should have SOME gear to share between them. The purpose of playing the Game System before expansions is not just to learn how to play, it's also to build up gear, gold, etc.
The expansions pretty much ASSUME you've upgraded your heroes, hence the increased difficulty. The only exceptions to this are the "solo quests" in EQP/BQP which were originally purported to be for a single fresh hero who was trying to "catch up" with the other party... now they didn't do a great job of this because although you get lots of gear, the difficulty is such that it's really only workable for someone who is already upgraded (or just really darn lucky). So that errata aside, you will certainly run into experiences where one or more heroes are starting from scratch either because they joined the campaign already in progress or had one (or more) character(s) die without the possibility to be revived with a last minute save (and perhaps their gear was claimed by monsters).
If you did wipe the slate clean, you'd just have to turn around and then give them free gold and/or equipment and hide the needed artifacts early in the quest as special treasures anyway to make up for it, because they assume you've played at least the game system beforehand (all or more of it).
The last artifact (spoiler) you get on Quest 14 after killing the final boss, so there would be no opportunity to use it if you lost it at the end... to merely make it a special treasure to find again early in the next quest (in whatever pack you follow up with?), seems a little silly.
So I'm all for continuity as much as possible. Sure, if you're playing with all new people or it has been years, maybe starting from scratch makes sense, but again if you are jumping right into the expansions, you should get some boosts to make up for not earning your way there again and what you'd accumulate. If you as Zargon are worried that the heroes will be too OP, you don't have to invent a storyline where they all went bankrupt, had gambling debts, or got sued by the citizens after all the destruction they wrought defeating the bad guys last time... just entice them into buying potions and/or mercenaries this time.
