Was suggested many times indeed.
But to avoid over-flood and "abusing" , my suggestion was to 'lose something' while downgrading.
So, say, +1 item turns into 2x un-upgraded, therefore auctionable, items.
+2 you ask? Well, 6 (2x3 if you will)
And for +3.. 18.. (2x9)
Talking of over-flood tho it's not a rocket science that people won't downgrade their items until they become obsolete/outdated. So it's not an issue.
To think people keep their outdated gear and not use better ones just because they are upgraded..
Or that they don't want/can't afford Reskill to another build because of that.
And yea, such thing would make helping newbies much easier and would keep them around.
If they wanna make Downgrading via ('reasonable' amount of) Nuggets/Bonds only.. sure, whatevs
All of the above are win-win for Inno.