It's funny, and ironic, but the only people who grizzle about being able to smith things to the point of uber-powerful are people who have actually done it...and therein lies the problem. It's not an issue of the 'smithing' is too powerful, it's an issue of someone doing something and not liking the end result, or simply complaining because they don't like the way the game is designed.
There is one set of heavy armour that can't be smithed past the reputed point of maximisation, and I believe that all others can, but out of all the complainers, have any of them limited themselves to that one set of armour? I doubt it.
Regardless of anything else, some people will go to extremes...if it isn't smithing, it will be standing in front of a giant and blocking with a shield to boost block, or it will be running along casting magelight to boost up alteration, or it will be casting 'pacify' onto a bunch of chickens. Some people will power-level just because they can.
As this is a single player game, is there an issue with smithing, or is the issue with how some people have used it? Skyrim is non-competitive, it's not a multiplayer game where the current exploit fad is the be-all to end-all. Just because someone says "Hey, I can make uber-armour and level up quickly" on the forums should not be the governing motivation in a person's playing style, but there's plenty of people who have taken that path.
Certainly, the question of 'un-improved' loot and shop stock is a bit of an anomaly, but what is the other side of the coin? We go to a blacksmith, and can't purchase that ebony sword early in the game because it now costs 5000 septims? We suddenly find that there's a lack of base level weapons and armour out there? My view is that the system works as it is now...you can smith without taking perks, but you can only take it so far...you can find plenty of weaponry and such out there, and the ability to dispose of it is balanced against the money in the shopkeepers inventories, if you add another 500 to 1000 septims on the cost of loot then the economy will really go haywire, or players will not be able to dispose of the bulk of what they come across or win, or everyone will be forced to take speech perks simply to be able to hock off their (ill) gotten gains.
No-one has to 'take' smithing, and no-one has to power-level or abuse it, a minority of players will, and a minority of players who think that it's overpowered is not a valid reason to change or alter a valid and workable game process.
We should remember that the big argument that the 'smithing is overpowered' faction has been using in response to the obvious "Well, don't do it then" response, is "don't tell me how to play my game"...that's fair enough, but why then post that smithing is overpowered and try to tell Bethesda how the rest of us should be playing our game? It's utter hypocrisy...and it doesn't just sit in the field of smithing either.

