Treebore, you are absolutely, 100% correct that your game sounds like the logical conclusion of the C&C / D&D RAW "basic assumptions." A typical OD&D module had so many magical items lying around that a party would have +1 swords to spare by the end of the second one, and a magically-equipped retinue fighters by the end of the third or fourth (just as you describe). The basic assumptions force you to play in "D&D-world", instead of Middle Earth or Lankhmar. Rather than try to "fix" this "problem", as I have with my house rules, you have embraced it. So has WotC, with the creation of Eberron (which is a really, really cool setting because the rules support it and "make it work." The fact that the rules came first and Eberron second doesn't matter; what matters is that they work together.). I see these solutions as "sub-optimal" however because I like to evoke familiar literature in my games (whether Lovecraft & Poe, Tolkien, Howard or Homer), and that's very hard to do when you have the Hammer of Thunderbolts lying around. At that point D&D becomes its own milieu, and I just don't want to play in a world where every member of the Emerald Guard has a magical sword. That's not magical anymore; but mundane and common.
I would contest, however, your position that "fighters don't have intrinsic powers, they are made to use items of power." While that's an apt description of D&D Fighters (the class, as written), it's not an apt description of any fighter-type from legend or historic fantasy. I think fighters are made to fight, and they should be able to do that with whatever comes to hand (think of (1) Beowulf tears the arm of Grendal and beats him with it; (2) Conan breaks the rust of an old sword to kill the wolves; or (3) the scene in Crouching Tiger, Hidden Dragon, when Master Li Mu Bai (easily) defeats Jen Yu even though she wields The Green Destiny and he just has a stick).
Also, it just bothers me that the rules say it's near-impossible to make magic items, and yet there's one lying in every owlbear hoard.
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For the record I have destroyed two suits of armor succesfully and tried to destroy another set, a sword, and a Lance, but they made their saves.
Ah, but you did allow a save, yes? You see, because equipment is almost always non-magical and fairly replaceable in my campaign, I can destroy armor and weapons narratively. Favorite weapons can be broken, lost, stolen, thrown into volcanoes, eaten by rust monsters, swallowed by Purple Worms or simply left behind during a hasty retreat (they hate the last one the most), all without (1) the PC's being totally screwed, (2) me having to sprinkle the world with +2 swords, or (3) the players hating me (which they would if I ran my game like Serleran apparently runs his). This gives me way more quest hooks, adventure plots, and general adventure design freedom than RAW C&C allows for (without violation of consequences 1, 2, or 3, above). In other words, what you see as "cool" (Fighters getting their "awesome items of power"), I see as a source of serious issues.
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So how do you give fighter types "intrinsic" powers?
In the C&C RAW, only hit points and BtH increase with level, while AC and damage output remain flat (slight, +1~2 boosts sprinkled about, but just graph graph Hit Point accumulation versus damage-dealing capability (without magic weapons), and you'll see AC and damage are "no better than 1st level" for all practical respects (They're also pathetic (even with magical items as the game assumes) compared to what Magic-Users can dish out regularly).
I simply scale AC and Damage with level, so that they keep up with BtH and HP without the aid of magic items. Check out my NPC Write-Up of Beowulf (a thread on this board). As a 20th level fighter he does 4d10+6 dmg with a battleaxe. Just a plain axe; nothing special. If you assume that Druss the Legend is also a 20th level fighter, but uses a two-handed axe, he would do 7d8+6. He'd also have an AC of 30 (naked, before accounting for Dex) and more HP than you can shake a stick at.
Now, both Druss and Beowulf would be in trouble facing a werewolf without a silver weapon (or a Troll without a torch), but it doesn't ruin the themes of my campaign to allow for "rare but acquirable" silver weapons the way having daggers +1 in pawn shops would. Hell, Beowulf would probably take the silver torque off his neck, wrap it around his hand, and use his "silver knuckles" (2d8+3) to beat the werewolf into a bloody pulp; and that's cool with me.
To keep AC's from getting ridiculous, Armor grants DR instead of AC and magical shields (such as may exist) do not grant additional bonuses to AC beyond what a normal shield does (they only have "wondrous" powers, such as reflecting gaze attacks).
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Check out my Iron C&C House Rules: The Tombs of Akrasia