When a dwarf makes a pig-tail cloth sock, he gets two quality modifiers: one for the quality of his clothesmaking job, and one for the quality of the cloth itself (from a previous weaving job). Similarly, when items get decorated, the value of the decoration is independent of the value of the base item. I propose chaining them, as followis:
* For items that are made from other "base" items that have qualities: the value multiplier of the crafting job cannot exceed the value multiplier of the base item. That is, you are "held back" by using shoddy materials.
* For items that are decorating other items: the value multiplier can't exceed the decorated item's value multiplier + 1. That is, you can make things better by decorating them, but you can't dress up a badly-made item by making it shiny.
This encourages players to in-house more of their development, since all imported cloth is cruddy machine-made stuff. It also makes it a bit harder to make valuable goods. Of course, to make it work at all well, dwarves would need to prioritize the input materials they use by quality, which I propose would go as follows: the quality levels are mapped onto the skill levels, to create a quality priority. That is, a Dabbling Clothesmaker would prioritize using poorly-made materials; a Proficient one would prioritize finely-crafted materials, and a Legendary would prioritize masterpiece materials. All would use what is available if they can't find their desired quality range.
Finally, I suggest adding quality levels to more items. A high-quality bar of metal has few or no impurities. A high-quality rock is large, round, and crack-free. A high-quality bag of dye doesn't have miscellaneous bits of plant in it, and the dye itself has been finely-ground. A high-quality Plump Helmet was carefully picked, has no bruises, and was cared for properly while it was growing. And so on.
The rules for limiting output qualities might be a bit drastic. The overall goal is to encourage getting dwarves to high levels of skill in all available labors, and to make it harder to explode your wealth in the first year or two (so that "money" remains a problem for longer). Thoughts?