Tmone
I play a whole lot of games. What you are suggesting sounds like fun.
Here's my two cents -
1. Have a kind of "tech tree" but for tools. When I started, I had a small ball pein hammer. Now I have a big crate full. Every new tool means I can make new things, some of which are tools which I need to make more things, and so on. You can have a tech tree for skills (forge weld, tempering, etc) running parallel.
2. I think you may want to have more categories of metal than just iron. Historically, steel was made by heating iron to a certain temperature and allowing carbon to soak in. Perhaps being able to make better steel by using up coal and iron? Then you could have better steel, at the cost of time.
Perhaps some fantasy metals like mithril, and so on? Another way of improving metal was case hardening, where a metal object is encased in carbon-rich material and heated for a day or two. All ideas.
3. A lot of smithing is dependent on timing. Put the steel in the fire, let it heat, then whilst it is heating, gather your tools, then pull the steel out of the fire and work. If you bring it out too early, it won't work as easy. If you leave it too late, it burns and is ruined.
I hope some of this helps.
If I can help further, please let me know.