Okay, I've finally taken some time to jump back into Skyrim modding.
I took a look at the Amiella scripts and system that it works on. It has the capacity to switch out meshes but this wasn't utilized by the author (he instead chose to use texture sets to change out the texture on one mesh). That said, it uses a ring slot and has no capability for carrying upgrade or enchantment data over between 'break levels'.
Aside from that, it's pretty similar to the system I have made. I'm finally putting it into use and making a couple decent BU sets to try it out on. To be specific, I'm making the CBBE Remodeled Armor by Mak07 (the one I made the non nude version for, which is also still in the works) both Bodyslide++ compatible and doing this. I figure I may as well knock out lots of stuff at once.
The system, as I think I said earlier, works for all NPCs and the player (still has yet to be tested 100% thoroughly but I plan on doing that as I make some sets and play the game some). The script can be changed out for each set of armor so that different armor can break on different conditions, but anything I release will probably use the same script.
I'll keep you all posted.