Not sure how I feel about it exactly, but I honestly can't think of anything I would dislike about it.
As long as you still need to be the proper class and level to do the repairs, and so not just anyone could repair a level 50 (equip - they would need to have the levels themselves or get someone else to repair it), then I don't see anything bad about this system.

Less materials carried around doesn't seem like a bad thing, and it wouldn't break immersion either. In a fantasy world something called "dark matter" could probably do just about anything.