Instead of churning out many low quality items to raise skill, give players the option to do what survivors in a land of scarce resources would actually do: Break down previously crafted items for some still usable parts, and continue to craft on current items to raise their quality and utility.
Let builders bring in better quality wood to slowly reinforce the walls over time, let bonecrafters strengthen their armor with the stronger bones of a recent kill, and if the original item itself is too weak, or too specialized to be improved, let the crafter take it apart and put it back together better with what new knowledge and skill they've acquired since it was first built.
I've never played Wurm. Your idea sounds really cool though. Still uses materials and time and you get something cool to out of it. Even if it was just a good quality "named" item. Nothing over powered, of course.
This sounds better than grinding out items to delete.