Finally someone else who realizes how much it ruins the sense of progression by pumping smithing/ enchanting right from the start.
Actually it causes you to "overlevel" (if such a term exists) and the advantage that you get from better gear will diminish due to stronger enemies and relatively weaker combat skills. I made a mistake of going the light armor route for blacksmithing, and enemies now can 2-shot me as a rogue at level 35ish. I am stuck with a glass dagger when I should have gone for daedric daggers, and now there are some enemies that I cannot 1-shot.
Blacksmithing is indeed too cheap to level, compared to buying the training from a trainer. There's something wrong if a trainer costs you say 2000 gold to level up once, and it only costs you a fraction of that amount in iron to level it yourself.
There are actually diminishing returns for iron improvements. Improving iron daggers will not give you as much skill increase as improving dwarven daggers. But for some reason creating iron daggers doesn't have diminshing returns.
An easy fix for this is to scale the skill increase with the base price of the item created, like for alchemy. The more expensive the base price of the item created, the higher the skill increase.
But the thing is, there is a reason for you to keep making potions. Potions disappear after being consumed once, so you have to keep making them as you play the game. Thus you can level Alchemy just by playing the game.
Whereas there is no "natural" way to increase blacksmithing while you play the game. Once you have made the armor for yourself, that's it. There's no other reason to make more armor while playing the game. Thus the only way to level blacksmithing is through grinding it and then selling the spare stuff.
So maybe blacksmithing is easier to level to compensate for this problem.
Or maybe we can slow down blacksmithing, but introduce new proactive ways to level it. Say, let people melt weapons and armor down to ingots (1/2 or 1/4 of the mats it takes to make them) which gives them free ingots to make stuff and thus level blacksmithing. That saves you money from having to buy the expensive ingots yourself.