Found a few more bugs and started color coding the penalties based on their source. Maroon = weight encumbrance.
This isn't really dialed in yet because I can't figure out how to make it happen on its own (without the character having to drop/carry an item).
v1.2.6
I'm not seeing any issues with a tower shield on this update so I think it's fixed that issue too :)
EDIT: I added 1.2.7 with GM settings. You can turn on/off coin weight, encumbrance penalties, and color-coding of the encumbrance penalties (that one is still not working 100%) individually in settings.
EDIT 2: I just posted 1.2.7.1 to make color-coding the encumbrance work all the time (at least in my testing).