Weapon and Armor Deterioration

Houserule for weapon and armor deterioration:

Simple:
After each dungeon, your armor is damaged and grants 1 point less to your total AC. Pay 10% of the armor's cost, per point, to repair.
After each dungeon mark one point of deterioration on your weapon. When the number of points exceeds the max damage of your weapon, it breaks. Magic weapons don't deteriorate.

I figured this requires minimal tracking, but still some element of realism, a small limiting factor on money, and motivation to head into the cities, where I have some nice encounter tables and quest hooks.

Much to my surprise, however, my players opted to keep track of more things in favor of greater realism, thus:

Realistic:
Whenever you take more damage in a single hit than your armor bonus+dex (dex because of the assumption that you are able to deflect blows enough to less severely damage your armor), you lose one point of your armor bonus.
Ex: A fighter with a dex bonus of +2 and leather armor (+2 AC) is cut with a short sword for 6 damage, which reduces his leather armor to +1 AC. But a knife stabbing him for 2 damage is not enough to deteriorate his armor.

Whenever you critically fail (natural roll of 1 to hit) with a weapon, mark one point of deterioration on your weapon. When this exceeds your weapon's maximum damage, it will break.
I.e.: After 6 critical fails (avg.: 120 swings) a short sword (1d6 damage) will break. It is assumed that larger weapons are sturdier.