Well so far we know you can create items from the materials you get from beating monsters, and if you can create I'm pretty sure you can upgrade. You can also change the colour of the weapons --- This place reminds me that common sense isn't that common
Not sure i'd want an upgrading system, maybe i prefer to simply find or create new weapons and "items" similar to what happened in FFXII (i liked this aspect in FFXII a lot).
Anyway, if there is an upgrading system i would be happy as long as it is way better than what was present in FFXIII. I love FFXIII, but the weapon system (and other things like the crystallium system that won't be present in LR) was not that great.
................and one last thing! The ultimate weapons shouldn't becaome available defeating the strongest optional bosses if not there would be no reason to have an uber powerful sword if there is nothing else to fight. --- "Remember, you can make anything as idiot-proof as you want, they'll just build a better idiot...."