I am starting to replay game. I finished, but as I read threads, there is a lot I didn't do. I assume there are probably shopkeepers all over who can improve existing items with gems. I just now found out about the horn of Valhalla and Mace of Disruption. Looking at the gems, it would seem that many will add power to other items. Some gems descriptions say they help in scrying, or polymorphing, etc. but I never once found a use for them and finally sold them all (except for 1 rogue stone to go to twisted rune) Does anyone know of other improvements. Thanks

The only gems you'll need in SoA are a diamond and a bejuril which are used to upgrade the Horn of Valhalla. You'll also need a rougue stone for the Twisted Rune plot.
Only Cromwell upgrades weapons. The exception to this is the flail of ages which you can forge yourself in Nalia's quest, and the horn which is done by Maheer in Waukeen's Promenade.
If you intend to proceed onto ToB, then be aware that gems'll come in very useful. Refer to the ToB manual of what to sell and what to keep. Off hand, from memory, items can be upgraded but will need diamonds, rogue stones, king's tears, etc.

------------------
"Butt-kicking for goodness!" - Minsc
"Cities always teem with evil and decay. Let's give it a good shake and SEE WHAT FALLS OUT!!" - Minsc
http://www.dabros.net/images/tcampbell/hadb6copy.jpg