A good point was raised about crystalline items, first to go would be the ones with max damage done to them, so it should be at a reduced amount of points for it (max points for an item with 95% durability and, an extra bonus for items that have no loss at all). 1 point for those with 10 pts of durability or less left to them.
An extra 2 pts (or 1 pts) per forge level per item would be nice, as for crafting levels, I am not too sure how you'd work it out (previous suggestion above was nice with a perfect forge worth 5 pts extra).
This is a must for the game as it will improve it by leaps and bounds and, as we all know, more ways to dump gear from the game means we'll get more chances to have events.
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BTW, leave the gold out of this, we got the caves for it and, as for the items, make them be non-bound items and, maybe have a set or 2 that could only be made this way.
Now, on to the epic idea from it.....I like it. However, you would need to drop a ton of items in and, hope you get an epic. Maybe if you sac an epic item you can increase the percentage chance of an epic coming out (make it worth wild for people to dump them in).
Either which way, a great idea that has even greater potential.