So if we have all the expansions added to the item shop deck and we finish act 1 according to the rules On page 22 about Act II section 2.

Hero players now have a chance to visit the shop and purchase any Act I Shop Item cards. Deal out all remaining Act I Shop Item cards faceup. The hero players may purchase any number of Act I Shop Item cards they are able to afford

For some reason I was putting the cards back in the box if the heroes did not purchase them not back in the item deck. But if you play with all the expansions the Act 1 shop deck is HUGE.

Is that correct to play with all the Act Items.

Yes it's correct to play with all the items, and not to put them in the box.

And then at the end of Act 1 I still flip all the items for the heroes to shop for?

At the end of Act I you still replace the item deck with the Act II item deck, as normal.

Yes, the item decks get bigger and bigger with each expansion, but they have tried to keep the ratio of weapons/armor/utility/etc. the same with each new addition.

And then at the end of Act 1 I still flip all the items for the heroes to shop for?

EDIT: And in response to your earlier question- unbought items (and sold items) return to the shop deck they came from. The deck also gets shuffled each shop step. This can result in the same shop card coming up during multiple campaign phases.

Just be aware that by mixing expansions into making a single items deck, a [tiny] fraction of the items will be completely "dead" for the campaign. Like finding boots allowing you not to take damage on Hazard spaces and you´re not playing Shadows over Nerekhall. However I do think these cards should remain in the deck. If you allowed heroes to thin up the deck off items they don't expect to be using, then it would open up for crazy shopping phases and consequently huge balance issues. Not finding the perfect set of items during shopping is part of the game. You can always save up for the next run.

Plus said boots can be found during a search action through the treasure chest card, so it can be re-selled to provide additional gold.

Just be aware that by mixing expansions into making a single items deck, a [tiny] fraction of the items will be completely "dead" for the campaign. Like finding boots allowing you not to take damage on Hazard spaces and you´re not playing Shadows over Nerekhall. However I do think these cards should remain in the deck. If you allowed heroes to thin up the deck off items they don't expect to be using, then it would open up for crazy shopping phases and consequently huge balance issues. Not finding the perfect set of items during shopping is part of the game. You can always save up for the next run.

Plus said boots can be found during a search action through the treasure chest card, so it can be re-selled to provide additional gold.

Hazard spaces are functionally identical, according to the rules, as lava spaces, and in fact protection from hazards is protection from lava, and vice versa. An item that gives immunity to lava maybe isn't the most useful item, but hey, it works.

Yep- I thought the Boots of Iron were useless outside Nerekhall, too, until I looked again at the rules for hazard spaces:

Any effect or ability that applies to lava spaces applies to hazard spaces, and any effect or ability that applies to hazard spaces applies to lava spaces.

They are completely identical, except for the color of the artwork. Boots of Iron protect from lava, and Fire Imps heal damage in hazards.

With that said I wonder if fire imps can safely travel through hazard...

Any effect or ability that applies to lava spaces applies to hazard spaces, and any effect or ability that applies to hazard spaces applies to lava spaces.

They are completely identical, except for the color of the artwork. Boots of Iron protect from lava, and Fire Imps heal damage in hazards.

With that said I wonder if fire imps can safely travel through hazard...

Yup. That section of rules means

Flame Fiend: This monster ignores all effects of (lava/ hazard.) Each time this monster ends its turn in a space containing (lava/ hazard) , it recovers 1 Heart. In addition, this monster never suffers Heart from Burning.