Why does everything need to go boom and break after a while? Let it have for example 100% and then decay with use over time to 0%. When the item reaches 0% you can still use it, or fight or wear it, but you don't get any stat bonuses from it anymore. Until you repair it with repair kits made by crafters. Like the recharge kits, but better since the % will go back to 100% instead of decaying.
Sorry to name a other MMO here but Vanguard had that system, and it worked well and good, there was a constant demand of repair kits on the market and everyone was happy.
And seriously if one of my epic items or old legancy items just tuns to dust, that would really make me leave.