...With Improved Special Effects

[MunchkinMan]

Non-Item Treasure cards do exist, so this particular situation isn't completely uncovered. However, this particular non-Item Treasure modifies an Item, and the rules state (with some emphasis):

Once you expose a monster card, you must resolve the fight with your equipment as it stands, plus any one-shot items you choose to play.

Since enhancing an Item would not be leaving it "as it stands," you can't play a card like With Improved Special Effects during combat.