They could make the battle damage start to appear at 50% and lower condition, then make it look really torn up at 25% and lower. A cool aspect of that too, is it would be a very organic and visual way to bring gear condition to a players' attention.

It would be nice, but it would never happen. Too much time and money to make happen, which could be put to use making completely new gear/content. Its a lame answer, but its the true one.