I've done similar things. My magic item houserules:
All characters receive a +1 awesome bonus to damage, attacks, and all defenses at level 3. This bonus goes up by 1 every 5 levels. They also gain a +1d6 crit bonus per +1 awesome bonus they have.
All characters gain a bad-ass bonus to wearing armor at paragon tier and again at epic tier equal to the appropriate masterwork material bonus.
There is no more craft magic item ritual, instead, it is replaced by a bunch of individual magic item creation rituals--1 per magic item at the level the magic item first appears. That way, it's a big deal if a craftsman learns "craft flaming sword."
Eliminate all enhancement bonuses from all magic items. If they have bonuses that ramp-up with higher-level versions, instead they just ramp up when the wielder hits the higher level. If they modify the critical dice of weapons, then they modify whichever dice your awesome bonuses grants you. That way, if you get a flaming sword at level 3, it can stay with you all your adventuring career.
The DM then just controls which rituals are availible and which magic items are availible. All magic items can be very special, no character NEEDS magic items, and the math is not thrown out of whack.
For a Middle Earth twist, I might even cut magic item creation from Ritual Casting and create a new feat--Magic Item Craft.