I think that when a tool gets low on durability it should get various negative effects and you should be able to repair/restore your weapon. For example when your weapon/tool get to 100 durability it gets the "dull" effect, at 50 durability it gets the "blunt" effect, at 10 durability it gets the "crooked" effect, and when it breaks it should turn into shards, for example "shards of Swift Lindon Dagger". ("Shards of", "Modifiers", "weapon type", "faction title"). Then you can place the shards into the anvil and "repair the sword that was broken".