Except changing damaged weapons formula, or adding a repair system, a simple solution could be : put a different % bonus on damaged goods, something that will be enough to motivate the armies leader to sell them to buy new stuff.
Actually, all weapons/armors are sold at - fucking 80%, whatever their state. It would be more logic if it was -80% for -4, -70% for -2, -60% for -1, so on and so on, you get my drift.
This way it would be less insane to sell "decent" stuff (between -1 and +2) to use the gold to buy more masterwork. Would lead to way less fucked up inventory DURING battles and more "fluid" management of them BEFORE the battles.