I play on master and I limit my Nord warrior to using only armor that can be smithed using iron, steel, or corundum. For one it fits RP purposes great, AND has the bonus of preventing you from becoming too powerful and reaching the armor cap even with all the perks and smithing. I use ancient Nord armor right now, but will also switch up iron, steel, wolf, and sometimes steel plate - though the later is too powerful I think.

Really, the difference made by smithing makes the difference made by armor type look paltry. Yeah, going all the way to Daedric armor will give you some armor points over Steel, but smithing does more than that. Steel improved to Legendary is far, far better than base unimproved Daedric.

That being said, short of using the smtihing-enchanting-alchemy loop/exploit/whatever, smithing and armor skills won't make you unacceptably unbeatable even on Adept. You'll be more powerful than any single opponent in the game, dragons and giants included, but several opponents can still be a challenge. A mob of bandits led by a bandit chief can definitely be a challenge. Several mages will be a challenge.

So overall, just avoid that loop and even Adept shouldn't be boring, even if you use smithing.

My advice for you is this - If you don't want to run the risk of your character being a super-duper demi-god, you must have the discipline to limit yourself or bump up the difficulty. I'd say if you want to put a lot of time into smithing, use enchanting and alchemy very little or not at all. Only use potions or enchanted items that boost your smithing if you physically find them in loot, instead of making them (it'll be more exciting when you find, say, a pair of gauntlets with 12% better smithing abilities) Also, something I do is limit myself to 3 out of 5 fortify perks on all skill trees that have them. It's just something I do with my current character and the game has been more fun and challenging than my last two, and I'm playing on adept, currently a level 31.

Thanks for your input. And what about enchanting? Not doing the loop you're talking about but enchanting weapons that are also legendary.

I keep going back and forth after reading everyone's comments. If anything I think I'll play on Expert. Master seems a bit too much.

Yeah, Expert is something to think about. I think my next character will start on Expert. I'm not sure what to say about enchanting weapons; I never enchanted much, and no weapons. I used and improved some weapons I found, though, without them being game-enders.

as stated before; yea pretty much god mode. you play 2 handed or sword n board? try sword/board without heavy armor perks on a high difficulty. much more fun

It's not hard at all. I have full legendary daedric armor, shield and weapon. I one shot bandits. The only thing to give me a challenge really is an Ancient Dragon.
Master difficulty.

I play on adept difficulty. I like that the game is challenging at first. It makes it that much more satisfying when I do become invincible.

Well, the point of being the Hero of and Elder Scroll is that you're not normal, you become MUCH more powerful than a normal mortal.
See... here: http://www.uesp.net/wiki/Lore:Hero

Obviously. If you applied those same alchemy, enchanting, and smithing skills to dragonscale armor, your armor rating would be higher.