Loot is, and always will be, part of the central theme of ARPG’s.
Kill creatures, get phat lewts. Its what we are all searching for when we play.
Id LOVE to see this game take the ARPG scene by storm, and it has all the potential to do so.
I truly believe that adding a unique, fun, rewarding, interesting and balanced loot system will blow this game into the history books as one of the best.
We are right now, drowning in thousands of useless to semi useless loot items and, in my opinion, this actually detracts from the ability to play the game. It means players have to either manually scan through items (which no-one does) or you have to implement a whole other game feature (loot filters) just to be able to cut through the crap.
Alot of players are also hoarders, and leaving items on the ground that ‘could’ be sold (even for minuscule amounts) can sometimes be irritating if the only reason you’re not picking it up is because you inventory is full after killing 3 creatures.
So - I have a few key things i think would make the loot system incredibly fun.
Reduced loot amounts. Id personally have people come away from a normal level having MAYBE filled their inventory once or twice with gear if they picked up everything. Clearly towards endgame this would ramp up slightly. This makes finding loot feel rewarding and valuable. Makes rares ACTUALLY rare. Maybe you only see one every other map!
On-The_Fly breakdown. Rather than having to haul loot all the way back to town once your inventory is full, give players the ability to break things down to useful components inside their inventory. Perhaps even an “auto breakdown X quality of item” so you just need to pick up those pesky greens and they get turned into components automagically.
This gives value to every item. Maybe picking up one more white item will give a player the chance to craft something they really want! (this is kinda like a way better rune of shattering)
Crafting as a skill. Crafting is something that really gives a sense of ownership to items. It shouldnt replace killing things as a source of items, but as a way to support your build, and your characters growth as well as letting you define each and every character. It should itself be something fun, engaging and enjoyable. Indepth, but easy and rewarding.
I thought of, what i think, is a pretty neat way to incorporate the amazing ideas you already have with loot into something really awesome.
New crafting points/tree (made graphically and functionally unique so as to not saturate players in skills trees). The crafting tree is the way players advance naturally through their crafting journey. It should be something that allows players to specalize towards certain goals. For example, it might let players specalize in crafting unique shards that are stronger than regular crafted shards (see below), or have unique effects not found in dropped shards.
Or it might let players create items with better base stats or maybe it unlocks crafting certain set items.
(I threw together a completely unbalanced, very basic idea of what the tree could look like. It would be cool to have three branches instead of two, but hey.
Leveling crafting would be done VERY slowly (or with a big exp required to level curve), so that filling out the crafting tree would take you WELL into endgame, but you fill out at least one useful part of the tree as you level. Maybe one character would be more into crafting poison based shards, while another focuses on getting more re-enforcement shards to make better base items.
Gaining exp would be through breaking down items (very small amounts), which means exploring and killing slowly levels your crafting as you pick up and break down items.
You’d gain big chunks when you craft items or shards.
Finally, crafting levels could affect how your break down items (see below), giving you a chance to get more or rarer crafting components from breaking items down (if you put points into that area)
Have items that you pick up break down into;
Whites - Re-enforcement scraps. These would stack up to 20, which then fuse to form a simple re-enforcement patch. This patch can be applied to weapons or armor to increase its defense or damage by a set small amount. Each item can have a set number of patches applied based on the players Crafting ability.
Everything else (with an affix of any kind gets broken down into shard dust (of say 3-4 varying rarities). This shard dust can then be used to craft your own weak shards based again on crafting ability. As you advance through the crafting tree perhaps you could unlock lighting affixes, or poison affixes, damage or resistance affixes so that your characters crafting becomes unique to that character to help him advance.
This isnt ment to replace finding epic shards, but is easier for players to use than runes of shattering. This means players could pick up a new cool white item and (which a bunch of dust) craft it into a green-blue level item that is specifically tailored for their build (albiet with weak affixes until they get to end game).
Runes and glyphs could be incorporated into the system (rune of shattering would be an automatic skill), but things that improve other runes or glyphs would be a part of the tree.