I was a little disappointed with the lack of any visual change when improving an item in Skyrim. Supposed "legendary" items never looked any different than a cheap iron sword.

I was wondering if even such a mod would be possible. It seems to me that each improvement would have to apply a different texture to the item, or simply give you a copy of that item type with a new texture, whilst removing the old one from your inventory. Anyone willing to try?

Unfortunately, Smithing is not really accessible to us modders. What we could do however, is apply a script to each and every weapon in the game that replaces them whenever they reach certain health percentages with new textures/meshes.
Long and short of it is, yes it is possible but it certainly would be difficult and not terrible seamless.