Personally I'm not a fan of items having completely different stats than what they look like, but in a DnD/fantasy setting it would actually be very easy to implement this is a lore friendly way; glamour magic. Illusions should definitely be able to make characters look any way they like.
For example Disguise Self could be expanded to allow the caster to select the clothes and armour which they appear to be wearing. And IMO it would be logical if they could only replicate items which they have had time to study, i.e. things that they have had in their inventory, and not just any item in the game. Disguise Self is already available to a lot of different classes, otherwise I think anyone can get it in the form of a feat.
And if people are going to run around with illusions up all the time I think it would be fun if they also added more flavour interactions, e.g. high perception characters and spell casters occasionally commenting on it, perhaps even casting Dispell Magic occasionally on the player if antagonized.