In my journey to fix the multi-Life behavior, I stumbled across Edward's Medicine subroutine. Now that I'm a bit more experienced with reading the ASM data, it was easy to pick out the item number used and figure out how to change it. So, goodbye useless Medicine command! Here's the data you need to change (FF2us ROM with header):
1E4D3 Value of CE (Potion) -> This is the item that the subroutine checks against and subtracts 1 of, if there's enough (FF4j: 1E4EB)
1E51D Value of CE -> This is the item effect to use. Replacing it with CF makes it a split Hi-Potion, D0 a split X-Potion, and so on (FF4j: 1E535)
1E528 Value of CE -> This is the item visual effect to use; it corresponds with the item number (FF4j: 1E540)
So, for consistency with the original game I recommend leaving the first value and changing the second and third to CF, so that it just ups the HP recovery. This makes the command more useful, but not overpowered. Or, just change all of it and go crazy.

Post any tests or interesting finds here.
Also, I already tried Phoenix Downs -- they exhibit the same behavior as all other Life spells, so don't bother. Still working on a fix...