Either working as intended and enormously flawed, or there's a bug in Luck of the Sea.

According to the wiki, is doesn't raise the change of treasure, but reduces the appearance of "junk".

the "bug" stems from my suspicions of the enchant categorizing "treasure" as "junk".

My tests have shown that poles enchanted with LotS III catch a lot of fish and very little items (from either category) while poles with no enchants are more likely to catch items (regardless of category).

Maybe a tweak that could be done is make LotS affect the rate at which items drop from the treasure category. This is most likely what people thought when the enchant first came out anyway.

Thanks