Kinda like the item system that's used in Morrowind?
There are weapon types like Fine, Superior, Exquisite, Flawless, Epic and Legendary. As far as I know you can only have these improved weapons through smithing. If improved weapons are added, looting could be more fun.
In the vanilla game if you find a sword stronger than the other type you never get back to the previous one because it is always worse than your weapon. If improved weapons are added, you can find flawless type of that weapon and it can be stronger than yours. (Sorry for the bad English, I'm not from an English speaking country, I hope I could tell what I wanted to)