The equipping isn't so bad if you think of them like hand wraps or something similar to that. I've got my own mod with unarmed weapons, all of them variations of handwraps with different "studs" (iron, steel, orcish, etc.) that bestow extra damage ability. This allows things like sharpening (of the studs) and the need for equipping the item to make a little more sense.
It is pretty bad ass to be able to flame punch the crap out of people though...so even if thinking of them as hand wraps or fist packs or something doesn't work for you, the payoff is much larger than the amount that this breaks the immersion.