Hypersmurf,
I was thinking more about the idea of "leveled magic items" which I talked about earlier in this thread in regards to your enormous, friggin' hammer

I thought I might run the ideas from the article by you, in case you might be interested.
The article "Leveled treasures" appeared in Dragon Magazine #289, and discusses the ideas and mechanics behind creating magical weapons and armor. The concept behind them is that most are heirloom weapons. Each generation must learn the great power which is stored in them, and unlock them.
The mechanics are handled as follows. All leveled items start as simple +1 enhancement. To simulate the parallel growth of the wielder with the weapon or armor, the user devotes XP for the increases, just as if he were creating a magic item. The bonus is that they don't cost anything, although it does mean that the character advances slower than everyone else (except magic item creating spellcasters perhaps.) The table below shows the costs:
Code:
Equiv. Bonus Req. Level Total XP Weapon Total XP Armor
+2 5 1,600 800
+3 7 3,600 1,800
+4 9 6,400 3,200
+5 11 10,000 5,000
+6 13 14,400 7,200
The table goes further, of course, but for our purposes that's all we need.
There are a few other caveats to these weapons. You can never spend so many XP that it reduces your level. Double weapons cost double, and the wielder of the weapon who contributed the XP is the only one that gains these enhancements. To everyone else it's just a standard +1 weapon. Also, you have to actually be using the weapon or armor while gaining the XP.
If you wanted to use this system, you'd gain a bit more gold at the cost of the XP, but it would also mean that you could keep on increasing it. Or, you could increase Bar up to a +3 equivalent bonus. It's up to you. If you like the idea, feel free, I just like providing options that enjoy the role-playing experience.
P.S.: One thing it doesn't mention explicity, is that you can't "trade in" enhancements. Once you've unlocked one, it stays. Also, I think it would be a neat idea to closely tie the unlocking of an enhancement into the storyline. For instance, the "giantbane" enhancement would have very clearly tied into the war in Sterich and Geoff, which makes sense. Also, you don't obviously have to add a +1 enhancement every time. You could save up your XP and then add a +3 enhancement all at once.
P.P.S.: Since your armor is also heirloom, you could use these rules for that as well. Just be aware that with two such items, you'd be loosing a lot of XP.