They could always cap the market prices by offering loom points from the website for x amount of gold. Then no one would pay more than x for a loom point or any loomed item.
I think it's okay as it is. Retiring is bad from an ingame point of view. As I already stated somewhere else, in the same time and starting at level 1, you can make 4 heirlooms, or go to level 33, which is arguably a lot better (yes you get the xp bonus but first maybe you already reached the cap, and second a higher level grants you a better win ratio). So it has to be compensated somehow. The current system does this very nicely, as the value of an heirloom point is dependant on the market, that is, dependant on how the whole playerbase estimates it. Heirlooms are not as useful as levels, but they cost a lot to produce, and there is a constant demand since it's a way of upgrading. Finally, "good" items keep on changing due to patches, thus you need heirloom points again when you want to change your heirloomed equipment.
The side sword market is 100% speculative. No one buys a side sword to use it, so I would personally stay away from that item. You never know when people will stop laughing at a running joke.
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