Spatzimaus said:
The trick was, you could declare practically ANYTHING to be raw materials. The only question was what you could convince the DM of: "I'll make a suit of leather armor out of that monster's skin! What do you mean he's still wearing it? It's all just raw material, isn't it?" (DM didn't go for that one.)
Anyway, to the earlier point, my Craft check was so high that with the later rule you mentioned (the 1 damage per two points of success), if I looked at a sword funny it'd shatter.
Heh! I like the "leather armor" idea, but I figure that if fabricate doesn't specify unattended material, I'm about to institute a house-rule (especially since I just gave the PCs IMC a rod that can cast fabricate). Somebody's skin = attended

.
As for granting the 1 damage/2 points of success, that's only with the proper equipment. I might further limit that by establishing a max damage.
Another way to resolve it would be to establish a certain DC to bypass the hardness of an item when dismantling it with the proper tools, and then give a damage range. For example, you could rule that when dismantling an item, the DC=10+hardness for the item, and that the tools did 1d3 damage per round. It's fairly easy to dismantle paper, for example, but more difficult to dismantle stone.
I don't really think the rules cover this, though, so I'm just suggesting different systems here. My goal would be to set up a system that more-or-less accurately reflects the real world.
I'd guess my first system does that better. Frankly, I wouldn't be surprised if a master smith could break a sword with a single well-placed hammerblow; my first system, but not my second system (i.e., the one two paragraphs above), would allow that. On the other hand, anybody can dismantle a sheet of paper just by taking ten; my first system, but not my second system, would allow that.
Daniel