TL;DR: Tie Smithing to weapon/armor skills

It's seems that everybody and their maiden aunt wants Smithing changed and everyone has ideas about it. I've read through many of the ideas and have yet to see anything similar to the main idea I propose. And it'll take a minute to explain so I figured I's start a new topic. Ahem...

Main changes:
1. Eliminate need to put perks gained at level up in Smithing Tree
2. Provide an alternate means of getting Smithing perks
3. Tie the ability to craft more advanced armor and weapons to be dependent on your skills in other perk trees
4. Change Smithing experience to be dependent on base price of finished product (similar to the way I understand Alchemy works)
5. Add the ability to Smith bows and arrows

Okay, so here's the basic idea. At the beginning of the game, everybody can smith iron and leather armor, and daggers. In order to be able to craft any other armor or weapon types, the Player would need to have a point in the appropriate skill tree (Heavy Armor, Light Armor, One-Hand, Two-Hand, Archery). In other words, in order to craft a sword, you need to have a basic understanding of how to use one. To craft the more advanced armors, one would have to have more points in the appropriate tree. Weapon-tree perks allow Smithing bonuses such as decreased weight (increased swing speed). More details below.

In addition, you have to learn how to work the more advanced materials. In order to work with steel or banded iron the PC would have to learn the technique from a blacksmith NPC. Any vendor in any major city with a forge can teach the basic armor/weapon skills. The player would be required to have some raw ore and/or ingots in their inventory to learn the skill, and these would be consumed on 'practicing.' There should also be a small fee. Learning the appropriate skill grants the PC the relevant perk point (i.e., learning to craft with steel grants the Player the Steel Smithing perk).

For the advanced materials, the process is similar. Once a player has sufficient Smithing skill to get the appropriate material perk from the Smithing tree, the PC has to find someone who will teach him the skill. (In other words, at Smithing 30, the PC would have to find someone who can teach him about working with Dwarven metal.) This NPC can be a city-dweller or, in the case of more advanced materials, a bit harder to reach. The PC may have to perform a quest. (Possibly even learn the skill in a book found in dungeon loot, etc.)

In this manner, Players can more realistically specialize in different armor and weapons. Selecting increasing levels of the initial perk of each weapon/armor tree would unlock the ability to craft in increasingly advanced materials. All five trees (Heavy Armor, Light Armor, One-Hand, Two-Hand, Archery) have an initial skill (Juggernaut, Agile Defender, Armsman, Barbarian, Overdraw) that requires an identical 20 point skill increase to improve. This fits in very well with the Smithing tree.

Material.......Weapon/Armor Perk Level...Skill Level Needed
Steel....................................1.....................................20
Elvish/Dwarven....................2....................................40
Orcish/Adv. Armor/Glass.....3....................................60
Ebony/Daedric.....................4....................................80
Dragon.................................5..................................100

So to craft an Elven Cuirass, you would need a 30 Smithing and Agile Defender Level 2. To craft a Daedric Sword, you would need a 90 Smithing and Armsman Level 4. To craft Dragon Armor, you must have Smithing 100 and Level 5 in either Juggernaut or Agile Defender.

Note that as long as perk tree mechanics allow it, this system will let a Player bypass materials along the tree. That is how it should be. Each different material is not an upgrade of the previous one - only the final product is! So you are not forced into one side of the tree or the other. Plus, if you run across training in a more advanced material, you don't have to skip it and come back later - you can learn it right there (as long as your Smithing skill is high enough). You can still advance your skill churning out iron daggers, but as long as the experience you gain is tiered to the worth of the item, it will take a LOOOOONG time. Theoretically, you could do this until you have 90 Smithing, train, and then have Daedric as the only other material you know how to work. If you REALLY want to!

Smithing bonuses gained from weapon/armor perk trees
Since you already get a special damage bonus for weapon specialization (Bladesman, Bone Breaker, Hack and Slash, Deep Wounds, Limbsplitter, or Skullcrusher), and you can increase damage using the grindstone, I figured another damage bonus was unnecessary. I would like to decrease the weight of the weapon, which SHOULD increase its swing speed (not sure how game mechanics work in this regard). If this is possible, the bonus would be linear (1,2,3). This may affect the Quick Shot Archery perk.

Another option is to allow the creation of decorated swords. While I could get by without textures, they sure would be nice! The Player would be able to add gold or silver ingots, plus various gems, to a sword. Not only does it make the item more valuable (2-4x), the item would also hold a greater charge from a soul gem. Another idea I would need textures for would be for crafting wands and staffs. I'm not sure I even want to mess with that though because that involves different kinds of materials altogether.

Speaking of Enchanting, I would probably tie the Smithing perk Arcane Blacksmith to a perk point in the Enchanter perk of the Enchanting tree (in other words, you need a basic understanding of Enchanting to improve enchanted items). This link would allow scaling of improvements to magical items. The most fuzzy idea in my head right now is to figure out how to reward a character who gets to be a master Enchanter. Surely they could come up with something special at the forge!

Crafting bows and arrows
This would be very simple. Fletching materials would be bought as a package (one package could fletch 10 arrows) and each ingot would yield ten arrows. Bows would require 2-3 ingots and a bowstring. Additional ideas: different grades of bowstring for different draw speed or strength (increased rate of fire, increased bow damage, or increased range), allow 'sharpening' of arrows (on the grindstone), individual fletching components.

Well, that's it in a nutshell.. if you read this far!