While I kind of like the suggestion in the OP and a lot of what's been discussed in this thread, and I'm not a huge fan of Materia the way it's currently implemented...

Materia's spec, its purpose in the game, is not really to provide gear customisability in the first place. It's to keep crafting relevant by generating constant demand for goods and preventing sell-back at the wards, and it's to provide people with an alternate (grindy, gil/time-sink) way towards getting gear.

It might be a boring, crappy system, but it /succeeds spectacularly/ at its goals from the designers' perspective, and so I think any replacement system suggestion should try to succeed at the same goals the current Materia system succeeds at, that is, "find a way to keep creating a demand for gear". People (probably people who have played lots of FF games but few MMOs) are seeing "Materia System" and it's triggering FF7 memories for them - which is exactly why the developers were loath to call it Materia in the first place - but what they should really be thinking of are things like the enchantment system in TERA and... I forget what it was called in Aion but there was a similar mechanic of "old gear -> item -> buff to current gear", I don't actually know what MMO introduced that mechanic, but Materia is its clear heir with a few spins put on it; sadly most of said spins are annoying prayers to the random number god.

I don't have any great ideas as to how to adapt the system so that it's both interesting -and- fulfills the design spec of "keep crafters relevant", and frankly I'm sceptical about the Materia system /ever/ not making me rage, but I think it's important when criticising the system to consider why it was set up the way it was set up in the first place, and what the developers will be definitively unwilling to change.