[SixOfSpades]

Two things.

Law of Diminishing Returns. You must always have to put more into a process than you get out of it: You cannot simply take five Daggers+1 and some arbitrary amount of gold, and suddenly go, "Hey, I've got a Dagger+5!" All upgrades should involve, at the very least, Potions/Scrolls/Gems that would be in character with the final item, and usually additional "base items:" For instance, if you're combining two named Cloaks into one, consider adding a CoP+1 in the list of ingredients, without boosting the final item accordingly.

The Anti-Munchkin Rule. The last thing BG2/ToB needs is MORE overpowered items. If you're going to upgrade something, do it to an item that doesn't get much play. Harbinger is a good example, as nobody likes the "Fireball Self" effect, and nobody cares about the "Petrify Ogres" effect as all it does is destroy loot anyway. But the Robe of Vecna don't need no friggin' upgrades. (Note: Upgrading overused weapons is fine as long as all you're doing is raising the enchantment level, to keep it useful against enemies with very strong weapon immunities.) And for the love of Gond, don't combine two high-power items into one. ("Hey, look at me, I made the FoA and CFaeyr into one item!")