yes they've fixed it, i'm not sure if it shows up on your status but you will notice it, especially for weapons. 100% - 1% durability you have no penalty. Once you hit 0 you get absolutely NO stats from that piece of gear. If it's a weapon you'll do 0-1 damage all of a sudden. Durability drops very slowly now, and only takes major hits if you return while KO'd as it's become the death penalty.

Repairs are much much easier to do now. Dark Matter has been introduced so repairs have a standardized material and NPC's repair to 99% and are much much much cheaper than before. 1.20 is going to allow the npc's to repair accessories so after that you'll only need to seek out a crafter for repairs if you want to resell an item.