While I think these are pretty good ideas, I don't want there to be thousands of suits of Daedric armour, and everyone and thier mothers wearing it.
I do think 17 suits of Daedric is a bit much... Perhaps not every prince would have a full set? One Heavy armour set between the princes, one light armour set between them, and one medium armour between them?
With a few multiple of some, similar to Morrowind, but not a lot. E.g. there may be two boots, three set of gloves, and one cuirass?
Either this, or have one standard set of Daedric armour, not too hard to find, but hard to obtain, and each prince should have it's own set very well hidden throughout the world.
Well, varied doesn't mean common. Note that I'd also like a larger-in-general game world with more NPC's instead of cities made up of a couple dozen people; a place like the Ghostgate where the gathered elite wear full glass sets would be less jarring if they were among hundreds.
As was mentioned, "classic" daedric (i.e., from dremora) armor is made by binding daedra to ebony armor. As I see it, this is why you generally can't pick it up from slain daedra, since their armor is banished back to Oblivion just as they are, and why Bound equipment is weightless (being just the spirits) as compared to the heavy permanent type, being physical armor that's been "enchanted" with daedric spirits. It also means that the stuff is presumably made by mortals. However, the best, "true" daedric armor would probably require mastery in blacksmithing, enchanting, and conjuration, likely all in the same person and being performed at roughly the same time. To give some perspective, in Morrowind, Vivec and Divayth Fyr are probably the only ones in the country capable of such a feat. Lesser daedric armor, previously named Dremora armor, would be the less skilled result.
In that sense, the crappy versions would be more common (although like dremora armor, being "more common" than proper daedric is still less common than other armor types) but the true ideal examples would still be extremely rare. If daedric cults are made into more complete factions instead of being obscure single quests, they might have such items available as rewards. Conversely, they might give you a quest to bring the items to them, understandably feeling that the only known daedric armor from, I dunno, Meridia's realm should be in their hands.