[Pen N Popper]

As long as it's still fun.

Broken shovels, picks, and chisels are some of my least fun things. They can be replaced easily enough, though, at an NPC shop. No harm done.

Imagine a weakened oak shortbow. Everyone knows the joy of hunting down a crafter to make you that item for the static quest. Now imagine trying to get it repaired when there's no one else online. Will there be NPCs to help you out for a price?

A more dynamic economy is great but let's have it reflect what the player base can support.

One notion that is sometimes overlooked is not of weakening, but of strengthening. Perhaps the lowest an item can be is just "normal." If you bring it to a crafter with skill, they can strengthen it (more damage, better attack, more xp per use?). The weakening with use just returns it to normal.

If you must have breakage, consider that once it's strengthened in some way it becomes immediately subject to weakening beyond "normal" and breaking completely. Imagine this system as an "opt in." Those that don't want to deal with breakage pay the price of generic items.