Is a great idea.

But instead of recipes, which are pretty restrictive, I think it would be better to add something like components to the game.

So, you could build a regular weapon based on your skill as normal. Then add on magical properties using components found without the game.

For instance,

Shining Lodestone would add both +1 and zap to your weapon.

Your smithing skill could add durability to the weapon based on its level. Then, you could smith +1, +2, +3, +4, then when maxed out +5.

Each magic item you smith has a + value between 1 and 5. You can add as many as you want as long as the value never exceeds 5, and as long as your skill is high enough.

While you have a valid suggestion for creating magical items, your proposed system won't hold up for creating regular items. You can't just say, "mud, make me a longsword" - that would include writing items into the code, which isn't a good idea. You have to give it dynamic configuration structure that stores object IDs. When you say, "mud, make me a longsword" it searches through that configuration structure and loads the object based on the ID. And when you're all done, you have the same recipe code I wrote.

You'll need to propose a better framework if you want me to rewrite smithing and recipes.

Also, what you're suggesting sounds similar to what Bane suggested for alchemy/potionmaking, which would be based on the Morrowwind system. Different herbs would have traits and combining different herbs with the same traits would create a potion with that trait (mend wounds and blindness, maybe). The trick is to try to find herbs that don't have the blindness trait so your healing potions aren't a double-edged sword. None of this has been coded yet, so it's still up for discussion.