I'm not sure if this has been mentioned before, but is it possible/will it be possible to upgrade items or meld a bunch of items into new and better gear?
Your gear has Rarity, Level and a Talent cost. The first two does does not affect how you equip an item. A lvl1 Character could use a lvl18 sword, for example. The talent cost restricts the use of items based on how many talents you have, one per level after a certain point. There isn't an easy way to improve your gear in the manner you describe a la Torchlight or Diablo.
There have been player proposals along this line. I haven't seen any official announcements, so it's not likely for the foreseeable future. There's simply no mechanics in place to support it: each item is self-defined and although there is sometimes a continuity of names (Novice Altruism, Apprentice Altruism, etc.) there really isn't any connecting line for an upgrade to follow. If you just want random recombinations, that's almost the same as the current opportunity to sell some of your loot and use the proceeds to buy a mystery chest.
