Morroblivion

Maybe even have armor enchants that stop degradation all by themselves. So when enchanting armor you have the choice to negate item deterioration along with the other enchants.

I also like the idea of deterioration spells not effecting item status when looted. Although not as realistic it would make those spells much more viable then in Oblivion and Morrowind where you would only use it if you weren't interested in looting any of the equipped items.

I agree with everything except armor fixing spells. Coming from someone who often plays Mage, being able to repair armor for free only using mana for a spell would be unfair and could negate most if not all of the smithing skill. I would rather just have spells that reduce armor damage or enchants that remove it depending on how many item slots are filled.

That would be strange idea - to use magic for repair. It would be better to use magic for craft (for example - melt and form liquidified wood), but not it this game :{

I think it only can be in form of enchantment that makes item magically durable/regenerating/indestructible

Keep it simple as we can. Maybe it will be very mana expensive or instead mana it can take health or both. That you have to have some level to do it.