Anybody have any good ideas on house rules to balance the crafting system?

As it is there is a huge exploit if you perk all three crafting trees plus enchants. From my observations the base values for the armor and weapons actually looks pretty balanced but when you start enchanting +%smithing and taking +%smithing potions combined with perks things really start to go awry. Level 39 elf ranger and I can pretty much one shot most everything in the game, especially with sneak damage. So I was wondering what people thought about good house rules to use that both restrict the player from being too powerful while also allowing for good avenues of advancement.

My current idea for my future characters is to only perk at most 1 crafting tree and not to use the +%smithing enchantments and potions; your thoughts?

Umm... Bump

Simple, don't use any of the fortify crafting effects. Ignore them completely and just use stock crafting as it is.

Was thinking that too but was wondering if it balances in the later levels.

This is basically how my characters run. I only choose 1 of those 3 to "skillup"/perk at all, and completely dodge the Fortify abilities. I'll still use enchanted rings and stuff that I find, and use the basic upgrades on weapons, but anything more is unnecessary.

It's honestly more fun in a lot of ways too -- Smith/Ench/Alch advances your character in raw damage x armor pretty quickly, but the skill points invested will level your character. In lieu of the crafting skill, if you spent the skill points in, say, BLOCK, and used that in combat, combat becomes a lot more fun.

For example, took my character and smashed a Draugr Overlord. Had to chew through about 10 minor and 6 regular health potions, but took him out, even though he hit for 80% of my HP every hit ... if I let him hit me. Luckily, I could block his regular hits (dropped the damage by half), and bash him (interrupted over half of his possible hits).

Will be really nice when I actually get my block skill up and and it really starts to nullify basic attacks.

Either way, much more entertaining to have a character with HA and Block ranked up to solid levels and to use them, rather than just "autoattack" everything with SmithEnchAlch.

Edit: Also, I only buy very limited materials from merchants to craft with. I try to avoid it in general, and only skill up my crafting up to match the gear I find and the skill of my weapon skill.

Don't go overboard
Level crafting at a pace on par with normal advancement

That's fine for the early levels but by level 40 things start to explode to ridiculously high levels so I am trying to think of a system which keeps things realistic but keeps my character scaling with the mobs or at least gives fun avenues for advancements 'cause eventually you get stuck, or perhaps by level 40 I should just reroll my characters lol.

That's where discipline comes into play -- are you really, really stuck, or are you just 'stuck'?

No, that's exactly what I meant by leveling on par with normal advancement and not going overboard. Powering your smithing up to wear improved Daedric at level 10 = overdoing it. If you're 40 and need to improve your gear to get over a hump, then it fits better.