Such an odd item, though logical in its own way. It falls into the problem of being simply too useful - why would they not make dozens of these with such a useful effect? Anyone with mangled limbs due to accident (or otherwise) would gladly deal with the pain to get back a fully functional limb.
I think the simple adjustment of adding 'realistic' regeneration rates - months as opposed to days, as well as losing significant dexterity, agility and strength as your body restore the nerves and brain connections would help balance it - especially for PC use/abuse.
They were criminals being punished for a reason? Why should convenience be a consideration? Better they not have use of their fingers until their 'sentance' is up. Teach them dependency on others :) Go to Comment
How used? Simple - your party finds the ruins in some out of the way place. Perhaps some spirits or things drawn to chaos and insanity if you need the ruins to be a little less lifeless. I think the odd ruins sitting silently by themselves works.
It brings to mind the speculative cities the Chinese have been building, well before anyone is ready to occupy them, and now sit largely abandoned. Go to Comment
Termites, in certain places, make homes that can be eight meters high and only a half meter wide. They are built facing North to South to take advantages of the suns travel, maximum heat in the morning and evening and little in the afternoon. Imagine grassy plains with vertical structions facing a certain direction all over the place. Ambush? Maze? New creature? Larger structures?