How to price an item fairly?

**Note: These suggestions are coming from someone who has little experience in an MMO with an economy. I fully submit that these may be ludicrous or simply impossibe to implement So, when you read them, read them with a grain of salt.


This thread is concerning the difficulty (or, at the very least, perceived difficulty) of pricing items fairly.
Now, I know we have an auction house here, and hopefully, someday it will be in the game. But there really seems no easy way to price an item based on the demand/supply/fair market value.

I propose 2 ideas.

The first one is based on an assumption- as I am kind of new to this 'portion' of MMO's. The assumption is that the in-game economy is dynamic and is accurate _thru_the_ merchants_. *IF* that is the case, this idea should work.

1. An application could be written to allow you to:
choose an item
choose the 'color' or rarity
choose a mod (or 2)
choose a damage
choose a requirement
etc.

Each selection would contain an 'incremental' price adjustment.

Then you would have to plug in a 'going' rate from a merchant of a known item. For instance, I could go to a merchant to purchase a weapon. *IF* that weapon's price is dynamic, and the stats stay the same(which I believe they do *shrug*) then you could plug in the item into the ap and get a 'fair' price.

Now- this is tough to pull off as things like 3X green drop weekend would throw off the supply and demand, but it could give a nice starting point.

2. More out of curiosity, what is GWG doing with the auction house data? Is this data being stored? Couldn't this data be used to help determine fair market value? And much more reliably then suggestion #1.
It could have a 'sold for as low as...' and 'sold for as high as...'. With the players determining the fair market value, this could be very handy.

Thoughts?

EDIT:
You know, after reading the post, this probably belongs in RSI- sorry Mods

Primarily the market is driven by vanity and there is no way to put a price tag on that. An upgraded collectors max sword is just as good as the same crystaline sword. I realize you have a "rarity" qualifier but if last month someone was willing to pay 900,000 gold for it and this month someone is only willing to pay 500,000 gold there is no way to quantify that.

The only thing that I could think of would be an application (Java? Flash?) where the players just submit information on their trades, and the application regularly adjusts based on the submissions.