True, something like smithing in WOW is more realistic, you don't get smithing point from making low level stuff, however this would require an total rebuild of the system.
Basing is on price is good enough as high end items are more expensive.

I guess it will take more than 1500 iron daggers here as they have an very low value. Say you have to make items for 100.000 to get to master, with this the daggers will hardly count at all at higher level, while advanced stuff will level you fast.

Wonder if leveling by upgrading will be more useful now, does not require as much materials and give an nice price increase, might be semi exploited with smithing enchants and potions.
Anyway people will figure out the most cost effective items to make, guess dvarwen and advanced armors will be populare as they are easy to get materials for and sell well.

It is not at all how I read that.

I read it as, items will have a higher monetary value if your Smithing Skill is higher when you make the item.