As usual, Evilking, your prolific imagination stuns me
From the level I played, the lantern was found in a well-lit area... and not needed. However, to progress further, the player needed to carry it to light the darker corridors ahead. Of course, I tried blundering around in the dark without it, but I couldn't see much. It was weird and cool to experience 'darkness' as part of a video game mechanic, though perhaps it has been done before (
Amnesia maybe, I've only played it briefly so far). The mouse was moving about just fine in the semi-darkness, but I just couldn't quite see everything.

I can also see the lamp's potential as a lethal one-use weapon. The mouse could throw it or flail it in a circle around him... if the lamp hits something, it shatters and sets fire to it. It might be really handy for injuring or slowing down bigger monsters.

Your suggestion for using the oil as a flaming trap, or pouring the oil on other weapons (swords, and especially arrows) to augment them is really slick. As I probably mentioned before, I'm not sure if this kind of crafting is planned for GOAT, but it is an interesting prospect.
The idea of different glass on the lamp revealing different items or dimensions, just like your spyglass, is clever! Although (in my mind) the mouse carrying the lamp is kind of iconic, I'm fairly sure he will just be using the lantern mechanic occasionally.... like underground and when night falls (no news on a day/night system yet, but I'm hoping - fingers crossed).
Just a side note... although we have seen a lot of images from underground recently, I believe Seith will mix things up, with a lot of large outdoor areas too. He has stated that you'll have the whole island to explore, below and above ground (and probably inside of buildings and structures too).