This is a step in the right direction. Instead of just putting out a new set of armor, offer methods to upgrade existing armor to the next level. Dragon Mediums and Dragon Chains would not have tanked if they made them required ingrediants for making Dragon Full Helms and Dragon Platebodies. Not saying make it easier to upgrade than to obtain a new set of high level equipment, but offer an option that keeps the economy stable. Gives players multiple sources to farm instead of one boss that happens to drop the best.
I quite like the idea of adding parts to lower tier equipment to gain the higher tier stuff. I hope they do it with more than just claws, as this might give some more value to the currently worthless items.
Almost every other change is a step in the wrong direction though =S
My worry is the "exponential increase" mentioned. We know from grinding how big an impact exponential increase impacts gameplay. If they do this, then they need to release smaller tier increases. Something like Tier 65, 70, 75, 80, 85, 87, 90, 93, 95, 97, 99. That way you get the uber expensive because they're "the best", but you have something near as good that won't be as expensive.