You would think it increases demand, but it just doesn't. If you play WoW, crafted items aren't in very high demand at all because people can just get stuff from instances, so why pay for something that you will get NO return value out of (unless you can disenchant, then you get a little). No, people would rather stick with drops.
So you even got the flaw in WoWs System but totaly ignored it. The flaw with low level gear in WoW is not the crafting itself and it isn't that items are BoE it's that you get so much better gear in instances.
I would like a world without low level instances and without so much equip rewards froms quests so basicly like in FFXI but with BoE crafting items like in WoW. If you now add some good desynth mats in the mix, like let's say you need 2 D-Ingots for a Hauby and get 1 back from Desynth, so the demand for ingot would still never drop.
Personaly I think this would end up in an pretty good economy.