I don't have much to say about your post except this part...
Quote Originally Posted by lucas_b View Post
Alternatively, increase the prices for selling items to NPC's so crafters have a way out.
...to which I respond with a big fat no, no, no, no, no, no, no, no, nooooooooooo. This creates money out of thin-air. The more money in circulation, the less money is worth--textbook inflation.

It is my opinion that the core problem is that the supply of raw materials far outstrips the need and no manner of market finagling will fix the issue, but I can't think of any solutions for them to correct that problem.