Edit: forgot to say that no, this won't have a direct bearing on civil asset forfeiture of the kind you describe, because that only takes place where the identity of the property owner is unknown. The result in terms of not allowing the state to take money from people whose criminal convictions are overturned is great though.

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The idea is not asinine, it's perfectly rational.

Cops do a drug bust and all the criminals flee. (I'm personally opposed to drug prohibition but it's the law and the easiest example so I'm going with that for simplicity's sake.)

At the scene: 3 bricks of cocaine and $1m dollars. Cocaine is contraband so the cops don't need permission to take it, they can just help themselves to a few fat rails and then throw the rest in a furnace, resell it, or whatever.

What about the million bucks? It's property. there might even be a legitimate reason for it to be there (eg suppose it had just been stolen from a bank but the cops had yet to connect the bank robbery with the drug deal). The cops can't just take it, because if that was allowed then cops could just help themselves to any property they see and how would people ever know what happened to it? OK, so there must be some sort of process to document their taking possession of it until said possession is successfully challenged. That's a court's job.

On one side, the state entity that employs the cops. On the other...who? The (presumed) drug dealers fled so it's not obvious who the other side of the case should be. American law is built from the ground up around adversarial argument between parties with conflicting interests, so for administrative convenience we'd like to have the case be 'Someone v. someone else' like every other legal case. If we don't know who, let's treat the unclaimed property as its own entity until someone says different. Hence 'State of Jurisdiction v. $1 million.'

Practically speaking, this works fine most of the time. If you keep up with legal case news, in any port city you'll see a lot of cases like 'US Customs v. 1000 leather handbags' - sometimes because the handbags in question are knockoffs, sometimes because the paperwork got lost and a shipment ended up in the wrong place, to be later claimed by the rightful owner with documentation.

Asset seizure by police has been abused to hell and back, and I have no hesitation in saying that many police officers and institutions are corrupt. But the legal mechanism for classifying abandoned property is not the problem. That's a purely administrative convenience that is entirely neutral in nature. If you didn't have it, then cops would just label the money as 'evidence', it would disappear, and the problem would be worse because there wouldn't even be a paper trail to follow.