I agree that the Talisman itself is the representation of the Tower and not the Black Hotel. The way the Talisman is described makes this a certainty in my mind:
....he was in them, and in an infinite number of other worlds as well, and all at the same time. Nor was he simply in one place in all those worlds; he was in them everywhere because he was those worlds. The Talisman was not just the axle of all possible worlds, but the worlds themselves - the worlds, and the spaces between those worlds....
Yes I wondered about that too. I don't actually think it was the Tower though (I just mentioned that as an interesting theory others have mentioned.) Why? Because the Talisman appears to be the same in all worlds*, while the Tower appears different.
It's description in that passage is certainly close to that of the Tower though. I have an idea that while the Tower was around since it rose from the Prim, the talisman was an object created later. A powerful object with the essence of the Tower, maybe but not the Tower itself.
*I might be wrong about that though. It might just be the same in the two worlds of The Talisman, i.e. Jack's world and The Territories. I don't think that was the implication though.
And I dont think it was used up. It completed the task Jack had retrieved it for so Jack put it aside. When he tried looking for it later it had disappeared, possibly to a new hotel.
The outer shell was placed aside after the power had been used. That's the bit that vanished. I wouldn't discount the possibility that it regenerated elsewhere though, but I don't think so. I think the idea was that it was made to perform one marvelous function. It healed the Queen, and in effect the world too, as I think the Queen and the Territories are linked (much like the old idea of the King and the country being one, if the King is sick so is the country.) And since the Territories is also linked to our (well Jack's) world, that was saved too.
I dont think there is much connection between Maerlyns Rainbow and the Talisman except that the Talisman is the White and Maerlyns Rainbow is Maerlyns corruption of all the colours that make up white.
Yes that makes sense.