Sorry but i really don't get the "item inflation" worries...
You are playing in a game, dnd3e, where it is EXPECTED for half your PCs to be able to wield magic of their own, to cast spells, to summon fireballs, to conjure undead or celestials, to force undead back or destroy them, to fly for hours, to go invisible , to freeze enemies in there tracks, to turn into mist, to blind opponents permanently, etc... and i haven't even left third level spells yet.
So why should a wand throwing fireballs or a sword that works better against undead or a ring of invisibility be some mystical wondrous sacred rare "oh my gosh, its a MAGIC item" limited thingy?
In LOTR, every use of magic was shown as a wondrous thing and the main PCs had no magical abilities to speak of. They were more like normal guys thrown into the realm of lots of magical NPCs (lumping gandalf in the NPCs.)
Relative to the amount of magic power wielded by the PCs, orcrist, the mithril shirt and such, the "ooohhh ahhh its a magic item" stuff from LOTR would be artifacts in 3e. Playing something like full 3e with all the PCs classes going and making a +1 orc bane shortsword weapon an "ohhh ahhh a magic item" thing would just sound silly.
Aragorn: "This sacred item orcrist glows when orcds are present and is dangerous to them, it likes to kill them, to cut deeply into their...."
Jiminy the sorcerer: "Yeah fine, look show me the orcs and i will blow them to smithereens at 200 yards. Why let them get to shortsword range?"
But in a world where your main characters are expected to have one wiz and one cleric at least and where odds are the wiz BY CLASS can make scrolls at least, trying to make items that do what the PCs can already do (but the items are typically weaker) is just off.
In a 3e setting, several options exist for creating the feel...
first, without high level spells only 1 power of an item is revealed, so the "commerce" in magic would have to be in mostly if not totally, one power items like wands and other "simple" items. Any item with more than one power would through 10th level be relatively unidentifiable and thus fall into the rare or wondrous mysterious category.
Also, shudder, there are artifacts, which for 3e and most of the dnd editions in fact, do fit the feel of rare and wondrous, especially if you have them not do "these spells" but rather things PCs cannot do.
If you want a LOTR feel where a wand of firballs is a wondrous thing... you need to not have PC classes who can toss fireballs around by 5th level.