While like most of my posts this doesnt fall into "community creation" even tho thinking and writing is "creative process", we sorta lack suggestion thread, so I will put it here.

So whats an "issue"?

Well, ever found set item thats:
bellow your level
not matching your armor type
looking completely out of place on your character

I did. Quite a bit of times. Right now what I do with it is either research or deconstruct. Given how game works, its near impossible to sell lower level set parts. So how to solve this?

Reforging, restitching, reshaping

It would be lvl 12 blacksmith/tailor/woodcrafter passive, it should do following.
If you find any armor/weapon you can change its appearence to any style you know. Does it have catches? Yes.

You must be at same material level as item found, you will need to use 25-50% of materials of same kind from which is item made and obviously one racial type material. Simple example.

You found green steel Argonian helmet, but as you are Altmer, you would prefer it styled different way, so what you need is ability to craft using steel, some steel and Adamantite (racial mat for Altmers). Then you simply go to forge, select Reforge option, pick that green steel Argonian helmet and ding, you have same helmet, just in your style. Should give tiny bit of crafting XP.

Same way it would work for tailoring and woodcrafting. Its pretty similar to how Imperials work, except its more logical option. Plus I really dont think anything should be for free, it reduces value of things.

You could also use it to reforge things for other players, given that piece isnt bound.

Improving item level

Apart from this, reforging would be used to improve level of item. It would work simple way, instead using 25-50% of materials needed, you would use exactly same amount as required to craft new item. It would preserve enchanting and trait, but it would with each improvement reduced quality of item. So if you would start with blue item,+2 lvls would reduce it to green, another +2 lvls would reduce to simple white item. After that, it would become regular white crafted item with every other level improvement (regular white crafted items are actually better than found). Obviously no limits in regular enhacing via tempers/resins etc.

I think I would limit it to two groups, one would be up to lvl 49 and another VR1+. So you could in theory keep one item from lvl 4 to lvl 49, but VR content means finding some new item (by that time enchantmens would be useless anyway).

Giving new traits

If item was in time of reforging without trait, you can simply add one with reforging. Given you know it for that item of course.

Reforging and transmutation of set items

To reforge or simply improve set items, special rule applies, you can do that, but only if you know required number of traits. So for example Akaviri set would require you to have 5 traits researched. If you have it, you can improve it.

Transmutation would be new passive for Enchanting (since that makes a bit sense and its pain to level, this would be another way of getting some Enchanting XP).

What would transmutation do is simple. If you find lets say, Necromancer set, but you are heavy metal user, you could transmute that armor into heavy. Not directly tho, as its light armor.

There would be few limits in doing this. Every item can be transmuted only twice. And it must go in sorta logical sequence. So first you transmute from light armor to medium and then to heavy. Or reverse..

What would you need? Well, transmutation table, white armor of appropriate type and level and one Welkynd stone (new material, buy for hefty amount of money from vendors or find it on mobs/chests, also could come from Enchanting hirelings). It would transfer item specs from one to another. Original armor is of course destroyed in process. It will transfer only set properties, not traits or enchants. Also it would make item unbound.

Since crafted items come in 2 levels difference (apart from VR if Im correct), it would simply need to be either same level or +1 level. So for transmuting lvl 15 set item, you would need lvl 16 crafted (or simply if you are lucky and find lvl 15 white piece). Transmuting would lower level of crafted armor to 15 (no free lunch )

And thats all.

Final words
I think this would maintain importance of sets you can find, while giving tad bit more importance to crafters. But you wouldnt be forced to actually use it, if you wouldnt want. Just like is crafting now.

Regards,
Mescalamba EU