Masterwork items have their own kami. You can develop relationships with kami using the relationship rules, upgrading items by giving significant gifts of significance and spending magic capital. A fighter could commune with his sword and become exceptionally skilled with it, while growing to understand the spirit that dwells inside the sword.
Would be limited in enchantment value by character level.
Sacrifice of 2 magic capital per character level.
Item Spirits could have their own manifestations, alignments, goals and philosophies.