I kept getting people coming from the site My Girlfriend is a DM, but when I would try to go there I would get a WordPress login screen that didnt do shit when I made a WordPress account, logged in, and gave it another shot. Well, today I figured, "What the fuck, lets give it another go," and was rewarded for my labors by an actual front page. Their most recent article (as of this writing) discusses another article from Critical Hits about magic items and magic item-flavor, which I guess I'll touch on by proxy.
I kinda follow the treasure distribution method, by which I mean that players can hand me wish lists and I make the best of it. If I can drop something they really want into the mix, great! If I cant? Tough shit. Disenchant/sell it and move on. I try to meet them halfway, to be sure, but I'm not going to sacrifice logic for theme and/or consistency. Magic items in 4th Edition are not as necessary as they used to be, so they'll live if they their tiefling wizard doesnt get a master's wand of scorching burst asap.
If they dont like what they find, they typically just pawn it when they can, but now they are starting to see some reason to my rhymes and hanging on to some of the odder shit because I like to foreshadow things or give them an edge. If I want to throw a hard encounter with undead at them, I'm liable to put in some gravespawn potions to give everyone an easier time. This rewards the players who recall and think about their inventory. Of course, sometimes they just fucking forget about it, to their detriment.
For my players: does anyone recall that magical tattoo from The Hounds of Ulster? Jerks.
As for keeping magic items magical, I rarely just drop in a magic item with just its label intact. In Songs of Erui magic items can be created through the standard means of arcane magic, but many are made by taking objects with powerful spirits and carefully shaping them. A spirit might inhabit a vein of metal that is used to make a sword, or a tree that is made into a bow. Sometimes spirits are also forcibly bound to something, as well. This allows me to easily make legacy/intelligent weapons that grow in power after becoming acclimated to a specific user.
Giving a powerful item a history is also a good way to add to the narrative of the game, especially if the owner isnt dead and/or has relatives that know about it. It can also be a necessary component for later in the game, as a symbol to prove something (lineage, honor, bravery, etc) or even a key of some sort (like a rod that can unlock a door or staff that can activate a portal).
Even fairly common items like potions might not look or act like the average market fare. Found some potions on gnolls? They're thick and viscous, like blood, and taste terrible. You can drink them, but dont plan of finding a lot of buyers if you're looking to sell them. Sometimes I like to add in some minor kicker effects. Like, orc-brewed potions might grant a damage bonus but impose a defense penalty for a turn in addition to the normal effect.
I also add a lot to item crafting if the players want to entertain that particular indulgence. Monster parts, powerful locations, or gifts from powerful beings can reduce the cost of a magic item, allow a character to create an item more powerful than they could, or even imbue an item with a special property. In Erui, ley lines can be used to reduce the cost/pretend you're one level higher than usual.
For example, in The Bone Forest, the players discovered an ancient druid ziggurat. It was built atop a ley line nexus and had an affinity for storm magic. I would have allowed them to reduce the time spent creating magic items, and if they had thunder/lightning shit would have let them make higher level magic items since it would represent them harnessing raw magic energy instead of just doing it themselves.
This is a bit more difficult to do, and I mostly just eyeball things and go from there. If I think they are getting too much shit, I hold off later. Its not hard to make up the gap or widen it later if things get out of hand one way or another. This probably wont work well for sticklers that really like to adhere to the treasure rules.
As an example, the party found lightning-charged crystals underneath the druid ziggurat, and after some careful scrutiny discovered that they were highly unstable but could be used to make some magic items tied to lightning (reducing the cost or letting you make an item of 1 level higher than normal), sold for some cash, or just lobbed like a grenade. You know, whatever works!