I personally think that 1,2,3,4 would be good to implement.
Making items with more expensive ores simply have higher durability would be completely useless, because standard GM crafted iron weapons are so cheap and easy to produce.
Why would anyone want to waste rose ingots on a kryss for durability, when they could just take 5 GM iron kryss's with them?
I think that allowing the weapons to scale with damage would be a fantastic idea... and given the relative rarity of the stronger ores I don't think it would ever become a balance issue.
In fact, it would give some interesting diversity to crafting.
Bob: An additional idea for you (which I presume is possible to code???)
I expect this would give the opportunity for alloy and mixed material crafting. If it possible to code this into the shard to make new and exciting weapons it would be interesting.
For example, to see a battle axe which requires wood for the shaft and mixed metals for the blade. For instance, Valorite + Blackrock = Nightforge Battleaxe.
Once the system had been implemented, it may even be possible to use other ingredients. E.g Demon's Blood + Verite = Unholy Kryss.
We could have alot of fun with this
PS. If it's not possible with UO (which wouldn't surprise me, then nevermind.... it was a cool idea
)