I believe, if a generic Rutland Railroad artifact somehow arrived at Sheepscot, it would be evaluated by the Archivist to determine if it fell within our mission statement (preservation and education of the WW&F, its predecessor roads, and the Maine two-foot railroads in general.) Since the Rutland falls outside of the scope (having not been connected even tangentially to the two-footers, such as the MEC was) it would be either sold via the giftshop, online auction (to fund the acquisition of artifacts relevant to the mission) or held for trade with another nonprofit (again, to acquire something suited for our collection.)
(I welcome corrections if I don't understand this general policy.)
So, in the case of a Rutland RR switch lantern, as an artifact that the Archives would consider "expendable", does that mean we should modify it? I suspect it depends on the artifact, right? If it was a one-of-a-kind exceedingly rare and desirable piece, then certainly not. If it was a commonplace object, probably so. This lantern however falls into a (wait for it, sorry) gray area between those two.
There is no "right" answer here. Every artifact should be evaluated against the mission statement to determine the best course of action - restoration to operation? conservation & display? modification for use as an educational tool? deacquisition? etc.