That one has always confused me too. I've seen requests for it dating back to only a few weeks after chapter 1's release.

If the auction house is too difficult programatically or expensive in server load, Amaranth's call for NPCs to cover all of the bases could be a great alternative if implimented well. Since the material/rune/dye trader model is already in place, I wouldn't think it would be too hard to extend this to weapon mods as well.

As for the weapon skins, the weaponsmiths in various areas could offer a handfull of different choices to reflect their area (Gothic swords in Zu Heltzer, Golden Pheonix blades in Divine Path, etc). They could be inscribable to allow the buyer some room customize. Prices, both in gold and materials, could also be varied, from inexpensive for mundane items to a few ectos and shards for chaos axes and the like.