It will be an epic quality item with a legendary enchant.

ZeroXFF wrote: »

I also noticed that sometimes if you have an epic enchant on an epic item, and then upgrade it, you get a legendary enchant on a legendary item. I don't know if it was a bug sometime, or if it's intended, but I have multiple items that were upgraded like that, both crafted and dropped items.

This happens only with the original default enchant on the item. First, the item must be a dropped set item or a named item. Generic items and crafted items do not have default enchants. Second, the item must never have been enchanted before. That way, the original default enchant is still there.

If an item still has its original default enchant, then any upgrades in the item's quality will also upgrade the quality of the enchant. Any sort of enchantment placed on the item will forever eliminate the default enchant, even if the enchantment applied is the same as the default enchantment. For example, a Moondancer robe has a max magicka default enchant. If you enchant a purple Moondancer robe with a purple max magicka enchant, then when you upgrade the robe to gold, the enchant will not upgrade, because you had overridden the default purple max mag with your crafted max mag.

Also, there are some items (notably, the Syvarra/Bahraha weapons that drop from Thieves Guild heists) that drop with a "custom" enchantment already overriding their default enchantment. (Over a year ago, this was also a problem with WGT/ICP items that came from the key vaults, but that had since been fixed.)

ZeroXFF wrote: »

@code65536
I could have sworn it also worked on some of the crafted gear. But I'm not keen on spending 40k worth of mats to test that. Next time I upgrade a crafted item I'll say if it's different from what you described.

I guarantee you it does not happen with crafted items. If the item had the Infused trait, you may have witnessed a small increase in the enchantment stats due to the stronger effect of the Infused trait at higher qualities, but the enchantment quality is otherwise entirely decoupled from the item quality.