There have been many questions regarding the change in the recycling and selling magically enhanced items. Lietgardis, one of the Designers on Shadowbane, tackles this subject.

The new "formula" item creation scheme in Throne of Oblivion required a lot of changes to the old item rolling system, an old, unintuitive, clunker of a system. We still wanted to keep the old system around for guilds that couldn't capture mines or afford to trade for resources, but we had to modify some aspects. Here's why.