You probably 'simulate' crafting with ItemTemplateAddToCharacter() and play some animation where necessary.
Yes. And the magic bag that was introduced in EE allows to automatically transfer ingredients the crafting character does not have in inventory. Don't you like the pop-up window or the function itself?
Most crafting will be done in dialog, so there will play one of the available dialog animations. But external crafting sends information to the character script and the character will move to a barrel, well, oven or anvil, if in range, and play some crafting animations, so that can be elaborated a bit more.
Your changes and additions seem very useful and interesting! Especially blacksmithing needs more care and the crafting recipes definitely have to be overhauled. There are things like WPN_Arrow_SlowDown_A (Crafting 1) but WPN_ArrowHead_SlowDown_A (Crafting 2). And Molotov would need a higher requirement, in my opinion. It's just too powerful. Do you consider introducing new requirements like loremaster for some recipes (sadly no multiple requirements possible)?
SniperHF has pretty portable bed-rolls in his standalone module ANC and it's also on my list. It seems, a must have for D:OS!
I hope you know how 'dangerous' ItemHandleRemove() is, already stumbled into that 'trap' myself ;-)
I don't need it for crafting, I think. But I will take care when I continue work on the transfer script.
I will have a look into the torch script until tomorrow and try to answer your questions. Currently a headache is marching in and, haha, needs some zombie love.