Good sleuthing, Dave, and nice find!
Let me toss out another theory. Since this one had the town name deliberately obliterated (or so it appears), the company may have opened a branch in some other town and wanted to "legitimately" use their tokens in both locations. Thus the worked-over token would be good at their store anywhere in Kansas. Of course, the original location would be included, so this attribution is good, but I think there may be at least one other location where these tokens were used. Some research in the Kansas business directories may find the other location.
I have seen a number of merchants order their tokens as mavericks (no town or state on them) on purpose. One reason for doing that would be to make the tokens good at any or all of their locations.
The token (before the town was obliterated) was not a maverick, of course, but somebody made it into one.
On the question of other denominations, yes, general merchants almost always had tokens made in 5¢, 10¢, 25¢, 50¢, and $1 denominations. Many are seen with 1¢, $5, $10, and other denominations. I say there are others "still out there" as well as ones with the town still legible.
John in ID