Like Hemdian states, the Thieves World set from Chaosium was a good place to take Traveller to sword and sorcery.
Almost nothing needs to be changed to Marc’s first three books. Psionics are magic. Add two to four additional areas of psionic powers, and you are good to go. Just two additional ones really are needed, pyrokinesis and awareness other. The description of the effect is up to the player, the magnitude dependent upon the number of psionics points used, just like usual. I posted some of the converted non-player characters from The AD&D module Village of Homelet elsewhere here on a different thread. Below are the characters I posted previously.
Jaroo Ashstaff
76A7CA Magic [Psi] A
Cudgel 2, Medical 3 (TL 1), Leader 1, Administration 1
Telepathy, Teleportation, Awareness, Awareness Others
Burne
A7AB78 Magic [Psi] A
Dagger 2, Leader 3, Streetwise 1, Tactics 1, Administration 1
Awareness, Pyrokinesis, Teleportation
Rufus
A88779
Halberd 3, Tactics 2, Leader 1
So, ya, Traveller can definitely be used for high fantasy setting campaigns, with everyone running about at tech level one and psionics are magic. I've done it. It's fun, and it works just as well as other systems that are intended for medieval fantasy. Character generation is even the same, navy is aboard sailing ships, army is all about sword and calvary, scouts are like rangers, merchant ala Marco Polo, etcetera.