At the moment big chunk of hunting loot is useless and goes to PWN.
Why not allow recycling of looted items with ANY condition (not just broken items)? A percentage of TT value could be recovered as resources and HOFs could work the same way as in crafting. More hofs = more fun for the players.
If you think that this could hurt mining then allow only certain ores to be recoverable this way (logically it should depend on the item). We are lacking ores anyways.