Woohoo! I finally cracked Sneak!
This was my entire goal for going into Commands in the first place!
I wanted to change Sneak's stolen item to the fourth item instead (and thereby making it, mostly a steal only item, unless you're stupidly lucky). This is great for my hack then to where there will be (fairly unique) steal-able equipment and items!
I found it by doing a lot of traces in a lot of different places. The first place I encountered trouble is that the game never seems to execute the Monster Item Byte while in battle, which lead me to believe the stored item must be put Somewhere. So I loaded up Cheat Engine, did a couple of scans, while stealing from Eagle and FloatEye to lower down the results and found where that was located.
After that I did some math to find where it was located in normal memory and went to a breakpoint from there. After a couple of false leads, I stumbled upon what was the defining element of what I wanted to change...
$03/E256 BF 00 9F 0E LDA $0E9F00,x[$0E:9FE0] A:00E0 X:00E0 Y:0000 P:envMxdizc
BF00 9F0E or in otherwords Load Accumulator from 0E9F00 (+ what's already in the accumulator) leading to the Imp type enemy Drop table. I changed 00 to 03 (in hopes that it would give me it's rarest item on Sneak and...

Despite all of the other failures, that made my day!
This is located in ROM at...
0x1E456 - BF00 9F0E - Change the 00 to any digit from 00-03 to receive that rank of item when you use Sneak.

So I started looking into why the Avenger causes Berserk... then things got weird...
Following it a short ways when equipped in battle I came across a 04 which was being put into 7E2004 (The Status Byte) so I changed it and the status appeared to work, but Cecil first used the Avenger as an Item before proceeding to attack (While petrified mind you).
Then thinking that maybe if I just disabled the status byte all together, maybe that would solve the problems? No. No it did not.
What it did... and this is kind of difficult to believe, was had Cecil Mirror every Move Kain would do. Kain fights, Cecil would fight, Kain Jumps, Cecil would use Dark Wave, Kain uses an Item, Cecil will attempt to use the same item. Cecil would even go so far to try and cast spells that Kain had used.
If Kain has yet to act Cecil will just continue to use the Avenger as an item, as odd as that is.
It's almost like a proto-type Mimic class from later FF's. I can't say I Ever expected to find behavior like that present in FFIV.
If you want to check this out for yourself (maybe with a full roster)
Go to 0x03A4DE in RAM and change the 04 there to a 00.