Some final code requests (and screenshots)

You could change the targeting for said spells and items so they can't target monsters, that's a quick and simple solution. There's still some off-chances that the character can do it though if confused, I think. But there might be a patch or fix of some kind floating around somewhere to fix that as well, I forget. Anything beyond this would require custom code I'd imagine, to check for certain monster IDs..

Sounds like fedorajoe simply changed the song of the map from Johnny C. Bad to the Empire via level editor. For what you'd want, you'd want to set the song there to 0 (current music) and then you'd need to add an event bit check for the maps' 'entrance event', having it check for an event bit if Leo is recruited, play Johnny C. Bad, otherwise play Empire.
The Colosseum map doesn't have an entrance event normally, it's just set to 'simply return', the default one of 5EB3 (CA5EB3), so you'd need to create your own entrance event for it, to do the bit check/song change. I'm not sure how fluent you are with event editing, so this may or may not be a really easy task! Am willing to assist further if need be.