I was thinking further...
How about this: Base the forging cost off the creatures' gold drop rate.
So if the item is level 1000, the forging cost is based off of what the creature's gold drop rate is for a regular level 1000 creature. If the item is level 100, it's based off a regular level 100 creature's drop rate.
Basically, forging cost = n * creature drop rate
Where "n" is some multiplier, and the same one is used for all levels.
This ensures the costs are based on what is actually earned from the creatures of that level, rather than some formula that ends up with the cost going up way higher than our income from normal leveling.
As far as what "n" should be, take a look at how much it currently costs to forge a level 300 item (since that's where gold per creature kill caps out), and base the value of "n" off that.
Current toal gold cost to forge a level 300 item is 1,395,000.
Gold gain per creature kill is about 300.
1,395,000 / 300 = 4,650
So "n" would be about 4,650.
Yes, this means some people have spent many millions of gold more than it will cost after a change; I'm part of that group. However, if nothing changes, people will stop forging altogether, making the feature useless. Therefore, change must happen, and those of us who paid to forge items already... well, we made a choice to do it, and are stuck with it. But we can't let that stand in the way of making things better for the future.