Like Sir Whiskers said, one way is to just lower the treasure and give "free" upgrades to the PCs' existing equipment.
Alternatively, a leveled item's power may be divided into a number of receptacles, and the PCs have to find the receptacles and add them to the item to unlock its higher powers. E.g. a +5 axiomatic, holy, evil outsider bane sword may have its power stored in five diamonds (one for each "plus"), two sapphires (axiomatic), two sunstones (holy) and one emerald (evil outsider bane). The PCs have to find all the gemstones and add them to the base sword in order to unlock all its properties.
Another good way, especially for weapons, is to tie its ability to the creatures that it kills. The same sword above could have its more powerful abilities unlocked when its possessor uses it kill increasingly powerful demons.