Hello! thanks for your feedback, I'll jump at the chance to share my plans regarding crafting, so I can get even more feedback.
Crafting place in the game
First of all, crafting will be absolutely optional, not required to finish the game. Think of it in terms of Morrowind crafting; you can ignore it and be alright, or, if you love to make your own items, you can do it, and get an edge. It will not be a requisite to have a strong character that can face the biggest challenges in the game.
For instance, you can buy potions, which are expensive, or you can brew them yourself, getting slightly better potions for a cheaper price. A rogue skilled in brewing can use poisons often, because it's affordable, while one that has to rely on purchasing them, might only use them sporadically.
As for equipment, crafted items will often be better than drops, but they will not always replace them. I'll make sure dropped/purchased items are still useful as alternatives, and even required as components for crafting a better item. For instance it can be a nice way to gain access to specialized resist/damage items. Examples could be, enchanting blue steel weapons to add elemental damage (most elemental damage weapons now are based on iron weapon stats), or similarly, enchant plate or chain with additional resists.
A specialized crafter will be able to, in the end game, craft exceptional items that can very well mean a big difference. But that will likely only be attainable if you specialize (traits, skill points) and combining several crafts.
How it will work
The system is currently being designed, but there's some concepts I can already share.
There will be several separate crafts, and in each, a character will have a different bonus. Your bonus will come from your traits, some skills, and also, the number of recipes you have already mastered (i.e., done succesfully once). In order to learn a recipe, you will need to obtain the "recipe" item and use it, to permanently add it to your recipe list.
The system will encourage you to try to make each item once (or maybe item type, i.e, "iron weapon"), to improve as a crafter. But you'll gain no benefit from crafting 700 times the same dagger or helm.
When will it be available?
I will add brewing first, probably in a few weeks. After it's been tested and adjusted, I'll add scroll scribing, as it's required for the mage class. After that, will come the armor and weapon crafting.
What materials will be needed?
I think you can safely sell the current loot. You may need a few small gems maybe, a few perfect pelts for armor, but like I said, you will NOT be required to craft 50 times the same item. Blue steel weapons will be enchantable, as will be plate and normal chain.