It's not only a suggestion to reclassify "good" and "bad". Only the paragraph 6)
is a suggestion, because "bad" and "good" do not influence something other than
durability at all. That high armour protection values are often associated with
low durability and vice versa is unrelated. I've not found anything in the code
yet causing this deliberately, seems to be random.

The current code leads to situations where the "good" and "bad" attributes are
not consistently applied to items. There can exist "bad" and "good" items with
exactly the same protection and durability numbers and thus no difference in
"behavuiour" as an armour whatsoever.

Those ARE bugs in my eyes:

2) Normal items (not just armour) can end up with better durability than "good
quality" or lesser durability than "bad quality" items when created.

1) Items dropped on the floor lose their "quality" if you save and reload. The
numbers do not change, but they become "normal". Things in Tux' inventory keep
the "quality".

3) Even if you don't rebalance the functions, bad items will stay bad forever
(except put on the floor, saved and reloaded, see 1) for that), while good items
can become normal if they are degraded during repair, and normal items can
become good during repair when enhanced, but nothing will ever become bad when
degraded, no matter how low its durability becomes.

Moreover, the quality fix when repairing is calculated differently than when
creating an item.

Creation:

A) Decide if we make a bad, normal or good one.
B1) Make a bad one: 50%…100% * BASE_DURABILITY
B2) Make a normal one: BASE_DURABILITY + 0%…100% * MODIFIER
B3) Make a good one: 100%…150% * BASE_DURABILITY

So here we've already got a problem: depending on the MODIFIER, normal and good
items end up in the same durability range.

Repair:

C) Make normal if good and new durability < BASE_DURABILITY
D) Make good if normal and new durability > BASE_DURABILITY

See B1) and C): items created as good are degraded to normal by repairing them
if they end up in a durability range, where a newly created item would have
become bad.

Any normal item will become good, if repaired and > BASE_DURABILITY.

In fact, the displayed quality is almost complete nonsense, the only relevant
things are the numbers. The player, however, won't read the code but probably
believe that those special items are somehow inherently better or worse than
other items.