warning.
long-winded. from my experiences, the crafting system i would create would work as follows:
crafting would be a sub-class or thing you chose, not a class all of its own. you would choose your production type (weapons, armor, clothing/accessories, potions, etc) and your means of procuring materials (mining, skinning, herbalism etc)
crafters would be able to make new items based on recipes they acquired. there would not be a crafting leveling system (debatable, of course. i just don't like the idea of wasting materials grinding)-- you simply acquire recipes from looting, quest rewards, npc retailers, etc. i would say you would need to do quests in order to gain special abilities associated with your chosen crafting line. for instance, you do a quest and you learn the ability to add sockets to your armor. another quest allows you to add better base stats, or allow you to modify your crafting components directly in your inventory before you use them for crafting.
materials can be both harvested form the earth (by hand) and by looting your kills. special components to make weapons and armor etc even better could also be looted from kills or discovered hidden in a pile of dirt, treasure chest, etc. components could also be made by crafters.
the material amounts needed to make your crafted items wouldn't be an absurd amount. you don't need 5000x thread, 2500x leather or 500x gold. it would be absurd--and NOT fun--to kill a monster 8000x times in the hopes you'd get what you needed--or skinning all 2500x creatures after you've killed them. also, after a moderate amount of looting and pillaging, you might get some nice component drops. the producers of AION said they want to dispense with such an awful grinding experience and that should also extend to crafting. enough with super low drop rates (.005 percent?! come on.)
i think there should also be a component system for making final items. you buy thread from an npc. you gather your leather you skinned. you sew from that thread and leather some uh.. leather.. cloth (i don't know what to call it >.<). there would be an equal conversion rate 1x thread and 1x leather = 1x 'leather cloth.' all items made would go towards a final product, in this case, say, a leather chest piece, which would require say, 10x 'leather cloth' and 4x 'buckles' and 2x 'padding.' each component either made by the crafter themselves, or bought from another crafter, or looted. higher or better items would require a little bit more and maybe some special components.
during construction, you could use the skill you learned from your crafting quest, and in this case, add sockets to the leather chest piece. furthermore, after production of the item, you could further customize its color with dyes you would by from an npc retailer. a different dye would be needed for each section, say, the body of the chest piece itself and its offset pattern or trim.
players could then take components they looted and put those into the sockets to either add to the base armor value, stat value, or something that might modify an ability of that player's class.
looted components could also be used during the initial creation of the chest piece, to say, replace a player-crafted one that might not have any stats or stats that were of little contributing value. this would furthermore create an even more powerful item from the start, even before socketing. if an item needed say, 2x 'padding,' the player would need to loot 2x pieces of special 'padding.' the player spends a little while killing and looting until they loot 2x pieces of 'padding,' those pieces of 'padding' having a higher rate of damage absorption than normal crafted 'padding.'
even further, say you want the extra absorption of the 'padding' to be one that absorbs unholy attacks. you would then need to loot 2x of some item that repels unholy attacks--or buy the item from an npc--like 'holy water,' right click and apply the holy water to each piece of 'padding' (of course, as i said, you would have needed to do the quest first to have the ability.) if you can modify the component from the inventory, it lets you. i borrowed the example from leo for the holy water
so now the item has a base for both the usual armor absorption rate, and the special added protection against unholy attacks--from the start--before socketing.
what if you want the item to have a higher durability? you could go with the standard 'buckles' or you might loot a component to make those buckles even better form the start. or you might loot the nicer buckles to begin with. say then, you could loot a recipe that would allow you to make the buckles better so you didn't have to go out and loot the special buckles anymore.
durability is another issue all together. i would say you could buy repair kits for in-field usage, or when you return back to town, go to an npc to repair your item. i don't like the idea of items being unusable after a certain point.
as a side note--managing recipes needs to be very thorough with categories and sub categories to find things much easier. filters too. to arrange by level, component, or item.
loot and crafting. personally, i love the idea of crafting, but i understand the drive for loot. i think loot should compliment crafting in any game-- not be the means to an end for the end game. hell, i even love the idea of being able to take items off your foe and reverse engineer them. it could be a random loot recipe drop off whatever the foe had on him visibly. potentially what you could make from that loot would be better than what you looted initially. you could loot his boots, his chest piece, his sword, his hat, his necklace or ring as a recipe to either use for yourself, or sell to another crafter. (i would so love for all jewelry to be visible on characters.)