The more I think about it, the upkeep system just needs to be dropped entirely. If you just reduce the amount, then it doesn't accomplish its stated purpose and becomes a pointless feature.
Equipment wasn't the problem in crpg anyway. The equipment system is good and allows for a lot of variety, from squishy/agile to slow/heavy and everything in between. The problem was the retirement system and lack of level cap. Veteran players had built up stats that negated the penalties their equipment was supposed to have. This is what broke the game, not the equipment itself. We had too many veteran players running around in the heaviest gear and still attacking twice as fast as most of their opponents.
Remove upkeep. Keep the level cap and complete wpf wipe upon retirement. Reduce horse bump damage, forcing them to use their weapons instead of just trampling everyone. Keep friendly horse bumps, but with a 15 second grace period at the beginning of the round.
That sums it up pretty well.
The funny part, heirloomed items are still a problem. Basically everyone who has a bunch of heirloomed items is still laughing. More damage, more accuracy, and none of the pitfalls. We really need a good player wipe. But unfortunately the powers that be don't think it necessary.