Honestly, loot systems are hard, look at Diablo 3, it's in a pretty damn fun place now but it took them an expansion and many, many patches to get to that place.

Personally, I think "legendary" power level items are most interesting when they incentivize completely changing the way you play.

For example:

"I got the Sword of Minion Sacrifice and now I can sacrifice units in battle to deal massive damage to enemies, my strategy is no longer 'send out my doom stack of heroes' and instead it's 'send out my lone hero with 10 cheap mooks and sacrifice them all over the course of the battle to kill things, then reinforce with more cheap mooks'". I don't know that SK's mechanics are flexible enough to make a large number of 'interesting' items like this viable however, and coming up with a big set of good ones and balancing them is also far from easy.

In a perfect world, I think all the power levels of items would be craftable (I think the current crafting system is a lot of fun) except these game-changing Legendary Artifact items that change how you play the game, which would be some sort of rare drop from a big quest or something. You'd only be able to get 1 or maybe 2 such items in each game and either have to adapt your strategy entirely to make awesome use of them, or ignore them completely if they don't fit your playstyle for that game.

Lore alert!

With enchanting i am finding it V good.  Would love your suggestion of dire shops.  Natural shops would be cool also .. more expensive than dire shop but no doomsday points. 

Other ideas

Major mana potions .. you should have this in already

Compound crafting like the original enchanted leather boots ..

    * start with one crafted item, add some stuff, get something else really cool.

    * combine items ... 2 +3 defense rings +something = one +5 defense ring

    * increase enchant slots or power..  base item + mana + rare resource adds +1 enchantment or double resource effect

Amulets/rings that while equipped give you favor with a particular minor race.

Items to improve city administrators i.e. ring of enhanced production, lore, food, logistics, rapid training... only wearable by administrator?

I still feel like the crafting system needs a lot of work.

For instance, gems should come in tiers (or quality) for Crafting: Chipped, Cloudy, [baseline] (no modifier eg: Topaz/Emerald), Radiant, Flawless.

Each item requires a minimum quality, but if you use a higher quality when crafting you can get a substantial bonus to the base item.

I also still think Enchanting should be spell based, and you need to research the spells to enchant items beyond their base crafting recipes.  Meaning there should be an Enchanting spellbook.

Strongly agree.  I understand the comments and premise of the doom stack concept.  I like to play both styles, at times just racing a doom stack, other times taking my time going for world domination/ empire building.  Both are really fun and the player can decide how to play.   I feel the game could be improved with better empire building in mind. 

City focused crafted/enhanced items

More city spells

City specialization- Unique buildings, only one allowed in empire

Better defensive abilities not requiring logistics.

AI more aggressive against cities

Mercenary barracks- hire powerful units that do not cost logistics but may be a drain on mana,food,lore,or production