For the TLR version, look up Relic Weapons from LOTRO (i think thats what they were called anyway).

What I would like to see for horizontal progression (for weapons anyway) are weapons that you the player get to customize using a set of options available to you by class (job). To obtain these weapons, you would need the battered/tattered/broken/whatever version of the weapon, a seal dropped from a boss, and a crafter to put the two together.

Once you had the weapon, its only value would be its high base damage. The player would then do content that rewards abilities (in lotro they were called legacies) that could level from 1-10 or so. Each ability on the weapon would have a point value (think AP system in FF9) that would ultimately deplete and not let you put anything else onto it.

The abilities would buff/augment ones you already had. Reduce CD time, add additional effects to bland attacks, etc etc. The systems are already in place with the game... abilities can easily be replaced by materia. I can then make a 'build' or a 'spec' for my character... If I want to be a DRG that maximizes phlebotomize and disembowel bleeds, I would add those abilities to my weapons. If I wanted to make my jumps do insane damage, I could... you get the point.

There needs to be something in place that will put raiders, economists, and crafters in symbiotic relationships... also, theory crafting on which 'abilities' work better for classes etc. would finally be happening in game (as far as i am concerned there is no theory crafting to be had in game because it is too linear).

Im rambling now, but I think thats a good start.