I love that dog quest. Vicious doggies. They'd looked so cute too... until they took a chunk of my leg off. Anyway...
Yes, more scavenging would be great. I like how you need to go to city tiles to find junk, and how this gives a bonus to PvE because you can collect things like Flint, Flowers/Root, and Junk while fighting, but scavenging could be improved.
As Badger said (man, that guy has a lot of good ideas), caves need to be more "exciting". I'm not saying "Have Raiders with Sniper Rifles at every corner."
No, I'm saying that every cave should have at least something. Whether this be two pieces of junk, a deteriorated gun next to a dead body surrounded by little rats, or a pack of ten tribals waiting for something to eat, caves should be more exiting, but also, at times, more dangerous to go into. Like Lordus said once, it would be rare, but sometimes you would stumble into a cave with Fire Geckos right at the enterence, so it would be risky but fun.
Scavenging in random encounters could be improved, too. Maybe every once in a while, you find a dead rotting carcass when you enter an encounter with some loot on it. Not any high-tier stuff, just a thing or two to help some newbie that isn't skilled enough to craft yet.
Limit these types of "find deteriorated gun with ammo" encounters that I just mentioned to players level 1 to 4 or similar. To answer a future complaint, no this would not just lead to farming these types of encounters, because it will only be deteriorated 9mm or 10mm gun, with very little ammo, would be fairly rare, and people with alts with higher levels wouldn't bother wasting their time to find some deteriorated 10mm Pistol, but it could help a new player out very much.