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https://en.uesp.net/wiki/Oblivion:Leveled_Items
Once your Armorer skill hits 75, you gain a perk that allows you to repair items up to 125%. Since item "effectiveness" is tied to durability, this makes them more effective than they'd be at 100% - aside from enchantments (and sigil stones, which work like enchantments), this is the only way to "upgrade" your items.