I like it. A blacksmith can create items with enhancements from a limited list, such as extra damage, extra speed, and extra offense, basically any that can be implemented mechanically. You can add additional enhancements by providing certain items or ingredients. This could be an alternative to charming weapons. By collecting different charms such as Poison of the Hydra and Vampire's Teeth, you can add enhancements like Poison Damage (5) and Life Drain (3).
This reminds me of Neronomicon, a Sci-Fi MMORPG, where you can build weapons and items by collecting parts (useless while separate) and a blue-print and throwing them into your personal factory. Some time later, a new fully functional item pops out. It adds fun to hunting for rare parts.
