An Old School Sword using the above system

Flame-Heart. This bastard sword was forged for Prince Eadric the Red for his journey into the frozen south. The Sword is a is narrowly tapered with a lethal thrusting and the blades elegant Ibari steel seems to ripple like red flames. The grip is made of blood colored dyed ray skin that has been replaced several times. One the back of the pommel is a clear crimson gem harder than steel.

Like most Great Weapons, the weapon responds to the skill and power of is user.

L1-L3 +1 weapon. The sword blade is hot to the touch and in cold weather flares hot enough to act as a flame-less light-less campfire if placed point down in the ground

L4-L6 The weapon becomes a Sword Flame-Tongue also retaining its "campfire" ability. At will it may cast Burning Hands at the wielders level however this drains the weapons power and if it used the weapons drops 1 level category. It regains one level category of power per day.

L5-L9 The sword gains another +1. In an emergency, it is possible to place the weapon point down and call of a wall of fire. This operates at the users level. When this is done the sword is drained of magic and drops 2 categories of power.

L10-L12 The weapon gains an additional +1 (for a total of +3) in addition to the effects of a flame tongue. Anyone within 10 feet or so of the user is immune to normal cold and resists magical cold (save at +4, take half damage at any point) as well. If desired the user may call a Firestorm (as the Druid spells) this drains 3 categories of magic.

L13+ The user may use each of those abilities once per day without draining the weapon in addition to the above abilities.

And there you go, a cool item usable at any level with abilities the players can unlock and explore as they play.