I'm not sure I have seen much on this facet of gameplay. I was reading about Dominions 3 here:
http://forums.somethingawful.com/showthread.php?threadid=3241694&userid=0&perpage=40&pagenumber=3
Check out the post by Lonjon near the end of the page. Expecting small armies of super-tough heros he describes a strategy to combat them by forging specific items and using specific spells to produce mages with crossbows capable of causing blindness with extreme precision. Blind giants don't fight too well....
Will item forging in Elemental have the same depth as in Dom 3, which to be fair would be a huge achievement.
*edit* for anyone who plays Dom and knows, whats the big deal with Carcator the Pocket Lich? 25 Death Gems for +2 research? Sounds like a dodgy deal to me.