This is, in my opinion, what I believe the Smithing skill tree, and smithing in general, should have been.
http://imgur.com/hpv3U
Smithing in general, should have been recipe based like Alchemy, not a simple place Perk and instant unlock the next level of equipment.
Weapons and Armor should have kept the Degradation system from Oblivion/Morrowind (but at a much slower rate) while including the current upgrading via Workbench and Grind Stones. What could have been done, I feel, is that non-upgraded weapons/gear would not degrade, or at least degrade at a very slow rate, while upgraded weapons/gear would degrade to their lower tiers for example Legendary degrading down to Epic after a while. A player could then, to fix this, simply re~upgrade the gear at their local forging/blacksmithing location. Also, for degradation it could be done simply based on a per hit basis with each hit degrading the weapon/gear a set amount (although different materials could degrade faster and slower) or relative to the amount of Armor the enemy has or the damage the weapon does to the player.
The Smithing Skill Tree would naturally still be a 1-100 level system. The system however would not be tied to what you can make (like it is now) but rather to the quality of the work. For example, if you managed to pick up a recipe for a Daedric Dagger while your Smithing Skill was level 12, the dagger would be crafted with a much lower base damage than if you had crafted it at Smithing Skill level 75, but being as it is Daedric and thus a more powerful weapon than say, an Iron Dagger, its base damage would still be higher than an Iron Dagger.
Also I believe Blacksmiths (if this is possible) should be able to train the player like they do in the Blacksmithing tutorial (where you make an Iron Dagger and a Leather Helm). For instance if you wanted to be trained in making Dwarven gear without having to buy, find or experiment for the recipes (more on this in a sec) then you could travel to say Dawnstar and pay a heftier price to be trained how to make a few Dwarven pieces while being able to keep those pieces. An alternative to that I feel it would be quite good is to commission that Blacksmith to make gear for you. While you would not learn how to make it you could Blueprint it to find out or could use these Blacksmiths as a way to get custom gear for characters that are not Smiths themselves.
This version of Smithing also borrows from Alchemy not only in requiring recipes but also in experimentation. Obviously I'm not suggesting that your character would have to start sticking Ebony Ingots in their mouth to see what they can do but rather you could go to a forge and pick out ingredients you already have and try to combine them into an item.
First Perk:
Focused Smithing (No level requirement) 1 point
Choose either Weapons or Armor to specialize in. Chosen equipment will gain X% bonus to Damage or Armor when crafted.
What this means is that if you choose to specialize in Weapons and then make say, an Iron Dagger, if the Dagger normally has a base damage of 5, because you specialize in Weapons it would get a % added to its damage when crafted.
Second Perk:
Cloth Maker (No level requirement) 1 point
Can now make Cloth gear.
What this means is that... well, you can make Clothes.
Third Perk:
Jeweler (Level 20) 1 point
Allows the Smith to improve upon jewels.
What this means is that you could find a Ruby and, because of training, know how to cut it to become a Flawless Ruby.
Fourth Perk:
Geologist/Tanner (Level 30) 1 point
Allows the Smith to choose between either always finding a jewel while mining ore or yielding an extra Leather/Leather Strip when Tanning.
What this means is basically, if you mine for ore then for every piece of ore you gain you also gain a gem, or for every time you create Leather or Leather Strips you get 1 additional Leather or Leather Strip.
Fifth Perk:
Dedication (Level 40) 1 point
Choose a specific type of Weapon or Armor (based on Focused Smithing) to specialize in. Chosen equipment will gain X% bonus to Damage or Armor when crafted.
What this means is that if you choose to specialize in Daggers and then make say, an Iron Dagger, if the Dagger normally has a base damage of 5, because you specialize in Daggers it would get a % added to its damage when crafted and stacks with Focused Smithing. Basically this allows you to create a character, if desired, to be the best Swordsmith, or Curiass smith, etc.
Sixth Perk:
Blueprinter (Level 50) 1 point
Allows you to breakdown a piece of equipment to see how it is made, therefore learning its Recipe.
What this means is that it's Disenchant for Smithing.
Seventh Perk:
Arcane Blacksmith (Level 60) 1 point
Upgrade enchanted Weapons and Armor.
Eighth Perk:
Enchanted Materials (Level 70) 1 point
Allows the player to bring out the hidden traits of specialized materials (Elven, Dwarven, Orcish, Glass, Ebony, Daedric, and Dragon) that are imbued into the item on creation.
What this means is that if you create a Sword using Quicksilver (i.e. an Elven Sword) it would have some sort of special enchantment on it on creation that does not count towards the normal Enchantment craft. Basically, a weak, and free, 3rd enchantment. Ideas for this include:
Elven Weapons: Swing 5% faster
Elven Armor: 5% Stealth bonus
Dwarven Weapons: Cannot be Disarmed
Dwarven Armor: 5% magic resist
Orcish Weapon: 5 poison damage
Orcish Armor: 5% poison resist
Glass Weapon: Weak Candlelight
Glass Armor: 5% lighter
Ebony Weapons: +5 damage
Ebony Armor: +5 Armor
Daedric Weapons: 10 point Life Leech
Daedric Armor: Lowers Health by 15
Dragon Weapons: 10 fire damage
Dragon Armors: 5% Shout time reduction
(Those are just off the top of my head
;;; )Ninth Perk:
Master Worker (Level 80) 1 point
Material costs are cut in half.
What this means is that if your sword requires two ingots to make it will now only require one. Cost cannot go below one.
Tenth Perk:
Reduce the amount your crafted items degrade by.
What this means is your gear degrades at a slower rate.
Eleventh Perk:
Your trained eye for all blacksmith goods has been toned so well that you can craft gear of a certain style with various new materials.
What this means is that if you particularly like the Dwarven weapons for instance, the look of them anyway, but want to make them out of Ebony to have the black blade you now can as long as you have the recipe for the Dwarven item of choice. You would simply replace the Dwarven metal with Ebony Ingots.
Thoughts?

