I'd like to know what the repair system is like, since I absolutely HATE it when games have a system where your items magically turn to dust after you repair them too many times. I'd like to make sure this game doesn't have that before I get excited about it.
Armor goes poof also after being used (only combat uses though not crafting).
Armor lasts longer than tools though.
So Aralvar, you wont like the system in Xsyon. I don't know why you think its "magically" turn to dust. The way I look at it is the armor is so badly damaged that you can't wear it, or it's not useful. You try using armor in a combat in real life and you will find the same thing happens.
Pants and shirts used to be the only armor pieces that would be damaged in combat. Since I've come back, my worn shirt is still worn. Maybe PvP damages armor, but in my experience PvE doesn't at the moment.
To address the OP's concern--everything in the game except for the crummy gear you start with is player crafted. If things didn't wear out, there wouldn't be any repeat business for crafters.