It's a bit of a fine line to walk. On one hand, magic items based on math and formulas are a bit too regimented. On the other, they allow for a far greater diversity of magic items without requiring an individual write up for each item. His first item was a flametongue . . . but after however many decades of gaming, is it still just as magical to find the same item? It's new to the character, sure, but if the player has seen a dozen flametongues over the course of his gaming history, it's old news.
The proposition of have magic item construction as the purview of the DM sounds good, but at least from my experience with 2nd, 3rd and 4th editions, players will quickly read, assimilate and internalize any magic item list you provide, no matter what book it's in.
So I think the first step is to scale WAY back on magic items. I understand that this is something that has to be modular, from none to the Christmas tree, but I really think the base assumption has to be trimmed back to almost nothing. Two fighters in two different games shouldn't have the same items. One of the greatest improvements 4e made was removing stat boosting items. Sure they seem evocative, but they quickly become mandatory. We need to go further, removing +X items.
I'd like to see magic items say something about the person that wields them. One fighter might be a slayer of beasts, with his magical sword, one might be a bulwark against evil with his magical shield. But neither should have the other's items festooned around him to make the system work.
As for creation, it needs to be brought back to earth. In one campaign I play in, every time we level the cleric e-mails out a growing list of items she can create for us to pick and choose from. I'd like to see a return to questing for the materials needed for item creation. Magic item creation should be about adventuring, not about taking X days off from adventuring. I'd also like to see rules or suggestions for spontaneous magical item creation. Items that become magical through use. Is the warrior a hero because he has a magical sword, or is the sword magical because it's been wielded by the hero?