That's not always the case... I've got my Nightingale Armor to Legendary only by using enchanted smithing gear and a smithing skill of 100 and I've never used the alchemy loop\cheat.
Aha... well that would rule out my thief (dabbles in enchanting to increase the value of stolen goods, mixes poisons for use or sale), as well as my paladin type (does NOT use soul gems at all, mixes only beneficial potions to health/magicka/stamina). The mage character I played (on XBox, playing now on PC) didn't go anywhere near a smithy, ever. The ONLY character I've played that could even come close to this exploit would be a conflicted Orc mage/fighter who was thrown out by his family because of his magical skills. And he only used Orcish armor until resolving his "issues" and becoming Dragonborn, at which point he crafted himself Dragonbone armor. Still, taking advantage of design loopholes seems, well, just wrong to me. But, to each his own.