Smithing was never an issue for me as I did not grind it. I would work to increase the skill as I started to find/buy better armor and weapons so I could improve or make better items. But, in between those points, Smithing was just something I did when I needed to do it, not something to do to increase the skill.
However, I do like it that simple daggers are not as much an increase as more complicated items.
This.
Still don't know though why some have some seem to have so much difficulty with so-called "exploits" like the iron dagger thing, given that it is a single player game and the only person you end up "cheating" ... if you want to look at things this way ... is yourself.
Of course, if you use "exploits" such as this and then come to this board complaining that the game lets you become "over-powered", I can see where other forum members mights support changes to reduce or eliminate the "exploit" ability simply to prevent inane, annoying forum threads.