Idea nr.2. 

The idea is simple, a way of making magical items for the sovereign and heroes to use. But as much as I liked the Enchant Item spell from Master of Magic, the implementation I had in mind is a bit different.

 Instead of a spell, it should be an actual building, only one per faction, requiring some heavy research in order to be obtained, possibly some questing too (Like sending 4 adventurers to an underwater crashed spaceship, in order to recover the Oscillation Overthruster). And here's the kicker, instead of just spending mana to add properties to items, you have to spend other things, maybe even sacrifice stuff. Remember in Overlord how the minions used to jump like crazy in the pot? Something like that, for the Empire at least.

You should be able to throw a bunch of stuff into the forge, citizens, resources, armies, demons, creatures, maybe even more drastic things, like chipping off an elemental shard and chucking it in. Now, this will create some really powerful items, but balance things out, the more powerful you try to make the item, the less control you have on the final product. At first, spend a few resources and you'll be able to chose exactly what kind of item is created and with what bonuses, there won't be a lot of them, but you'll know what they are. But if you spend a ton of resources, then, at the highest level, you won't even be able to choose the form the item will take. It could be an armor, it could be a sword, it could be a pair of shoes. Regardless of that, it will be the most powerful pair of slippers in existence. But the nature of that power will not be known until the end.

This adds a note of randomness to it, and I love randomness in games. It's like gabling, but without loosing your shirt.

Also, in order to not lose the shirt, items like this should be lootable by the enemy, and recoverable.