Please don't do that. Crafting should be an optimal supplement. This is a dramatic change to how the realm loot works and, indeed, changes the very nature of gear hunting (which is a core mechanic). The ramifications to the economy and the reward mechanic for dungeons can not be overstated.
It is not interesting to enter a dungeon to farm up enough cogs so you can finally craft the next incremental upgrade. It feels bad, in concept. It removes the excitement of finding an excellent piece of equipment and replaces it with a mechanic that is uninteresting. As an optional system that doesn't replace anything including current loot drops - it should roll on a separate loot table so it doesn't further dilute loot chances and allows you to craft some of the find-only gear - but not the best gear - it's… better.
There are several different things you could do with a crafting system that doesn't wreck the entertainment value of dungeons. Here are some suggestions:
Crafting creates cosmetic gear - you have a new market in addition to the old one that doesn't compete with it.
Crafting creates an item that transfers item stats between like items - turn your Mage Hat into a Night Soul without changing any of the actual stats. Let townies dress for success.
Crafting creates temporary buffs like, for example, magic resist or immunity to specific spells for an hour. Immunity to dispel magic, spell blast, ect., would all be popular for certain dungeon runs.
Crafting allows you to add certain properties to weapons and armor. Instead of enchanting F/I/V/E, you farm up rare specific materials and craft them onto the weapon. Now you can play a hitter and stack up your gear without being crippled from a lack of chants. Perhaps some magic buffs remain magic only and crafting gains some buffs that are crafting only - like crafting retention?
Even short term damage/xp buffs would be popular.