I feel the best way to have handled it, to include the wear and tear aspect, is to mix the upgrade and degrade features but have it degrade at a slower rate... or even have it degrade relative to the enemies' own Armor rating (if they have one). Breaking would not occur, instead "breaking" would degrade the item to a low damage output or defensive Armor rate, perhaps even zero. So one could upgrade a sword to Legendary but over time it would slowly degrade to normal level and need to be re~upgraded at a grinding stone.
That would totally work for me. We've talked about how to improve smithing before (not tying your ability to craft to just your perks and all that), and I think this would make the perks more worthwhile. Selecting Smithing Perks would allow you to increase damage and slow down the rate of decline for your weapons.
Even though it's pointless, I still stop at grindstones and work benches every time I'm in town. I just enter the menu and let the animation go for a bit, so it feels like I was maintaing my weapons and armor. Stupid and pointless, but I still do it.

