Why can we duplicate items ?

[Lemon]

Maybe its programming side?

Also, in your consequences:
A lot of these consequences can be mitigated by tomes.
Royal Shields are already fairly important as it is.
When someone loots a legendary they still only get one. Its not like I can use all three of them at the same time.
And the alchemy econ is cheap because the stuff to make it is cheap and common, not because you can use one in 3 slots. Arrows/throwing weapons can just be refilled to max, so thats not even a long term solution.

I do think that the game does naturally punish you a little if you get too many of one item. 3 Shields? No offensive item. 2 Shields 1 hand? Short range. 3 of one Legendary? No arrows or shield to use it with.

But logically, I do think it makes sense for one item to be one thing, but I don't know how difficult the programming implications would be.