Your post is exactly the energy I'm talking about. In 1989 we killed a pile of kobolds and then when searching in their haybale beds we would find "a +1 dagger, a potion of invisibility, 3sp". There was no fanfare....the excitement about the dagger was that number went up.
Now, in my games, if a kobold had an awesome magical dagger it's going to be wielding it, and I'm going to customize its power to somehow be appropriate to the kobold. It's gonna be +1 to hit and damage but maybe this one has a unique ability to slightly shrink the user allowing them to squeeze through tight corridors without a penalty...or whatever unique idea I want to attach to it. During the combat the power is going to be used to show off what it does. Then, as treasure, the item will remain unique and not just a commodity to be tossed at a vendor when a +2 dagger becomes available.