I know there needs to be a death penalty (let's stay away from experience loss, though...), and I'm all for giving crafters more utility. However, I definitely agree that something needs to be done about the current repair system. Gear gets damaged far too easily, and it's far too difficult to actually get someone to repair gear for you. Maybe it's just because Kashuan is such a small server, but I've stood right in the middle of a group of crafters, offering more than enough gil for the Dark Matter plus a profit, and received no repair love for long periods of time. Of course, the 500% repair idea is a bit ridiculous.
This, however, is a great idea. Assuming the repair system is going to stay around as the primary death penalty, you could take this a step farther. Some ideas that come to mind:
-Gear damage is only incurred on death, or at least only significant levels of damage
-Repair NPCs become more commonplace and can repair gear to 100%
-Disciple of Hand repairs automatically give gear a quality buff, placing durability at 125%, or 150%, or what have you. Or, rather than breaking 100%, a temporary effect could be added that prevents durability loss for x amount of time/x number of deaths/x amount of gear damage.
-Chances to +1 the repair, giving either additional temporary durability or additional stat buffs (or both).
A system similar to this would be more of a reward for players utilizing the repair system, rather than constantly having the threat of damaged/broken gear looming over you. It would, at the very least, have a much more positive feel, kind of like WoW's current rested experience system vs. FFXIV's former fatigue system.