And I just updated my post to expand on it more =P
I agree you can't hand out items to upgrade Eso items but Law upgrades are so easy to get it wouldn't break the system. You have to entice players to want to run this content with something that is worth it from them no matter what stage of progression they are in. People leveling want xp, people progressing towards end game need upgrades, and people at the end want shiny stuff.
