I'm sure you've thought this thoroughly but the numbers on the provided example do not make much sense to me.



If I go with the craft & destroy approach for 50 swords then I've essentially completely spent/wasted the crafting materials for these 50 items.

Instead, if I create 100 swords and sell them on the market for just 55% of the cost of materials, I'm still better off than using the destroy feature.



You're putting a limit on how low the prices can go but still crafting items will incur a loss.

Increasing the fame earned by destroying items by a lot will simply force people down this path and make the "grind" quicker - but not address the original problem.