Hmm I really like your line of thought, Chthon. Honestly, I hadn't really considered going all the way cosmetic because I was worried it would be too radical a shift from the core game/the hacknslash ARPG tradition. But now that I hear you say it, it really appeals in that you really get to customize your character rather than feeling obligated to equip whatever the best items stat-wise you have (aesthetics be damned!).
I've so far been trying to push it in the direction of cosmetic customization in that I've been trying to clarify and simplify the items types for consistency, and breaking them down into 8 Tiers or Ranks (currently set at level 10, 20, 30, 45, 60, 75, 90, and 100. Likewise for the armors, but only 7 ranks:10,20,35,50,65,80,100). The push towards cosmetic came in the form of trying to squish down the absurd levelling curves (its also kinda more realistic - I don't see how one sword deals 15 dmg and another deals 738. It doesn't make sense). This reduces the feeling of being gimped by choosing to wear something you like because items get outleveled/become irrelevant at a much slower pace).
As I'm a fan of things being intuitive, I still want the cooler looking items to be harder to get, and likewise, generally be stronger than the wooden sword or whatever you start with. I dislike the D2 mentality - I want the bigger sword that LOOKS like it's stronger to actually be stronger, just not so strong that you're inherently playing the game 'wrong' by using a different one you like more.
I've been using legendaries as a kinda cosmetic shortcut by including some with the same models as the cooler looking/higher tier normals/rares/uniques I think people would still want to use as endgame equipment. The legendaries have endgame stats, and you can still hunt for the one you think looks the best as their base stats would be the same (since they're the same tier and weapon class). Again though, I didn't want items that LOOKED mid range to be legendaries - I want things to happen in the background without someone ~having to~ think about the numbers too much: If it looks stronger, it probably is.
GW is a great comparison and I think there were many things awesome about that system. I'm just not sure I want it to make appearance completely disconnected from their stats. I guess I'm aiming for something in between that regular RPG systems. I actually just reread your post and to clarify I'm standardizing them, but not completely negating level. All swords will have the same attack speed and range, but the damage (as of now) is still increasing with their tier. Likewise all crossbows have the same attack speed, knockback, and range. So basically item variation is between item type, and not between items, so you don't have to number crunch whether the faster sword with lower total dps is still a better choice because of procs. Deciding on which 'class' of weapon to use sounds like much less of a headache than that same decision for EVERY item that drops.
With the naming - I haven't been sure yet. In the mean time, I've been going halfway by giving a base name to each item appearance, and the 'variants' just have a small change. For example, there's the Longbow, and the variants would be Old Longbow, Yew Longbow, and Heartwood Longbow, for example. It might end up being too wordy once the affixes are thrown on top tho lol so I might go with your idea and just make them all "longbow".