The funny thing is that the tri-crafting loop doesn't make characters all that powerful, especially once you really start to go over the level cap. 600 damage isn't all that big of a deal, and there's an Armor cap that makes "oversmithing" armor useless.
I know. I'm planning on getting Ancient Nord Armor on my Orc, because with his base Smithing skill he can probably reach near the cap with it. Daedric is just a tad bit much.
Although, making a 600 damage Daedric Warhammer might be another issue. I've seen it done, and it supposed one shots Ancient Dragons. Personally, I don't see the appeal of having gear that powerful. I think some people THOUGHT it would be cool, but got pissed and started whining after they realized killing everything with ease wasn't fun.