Tequila made a convoy combine feature similar to the fusion you’ve described, and Kirb has a forging system that was used in Ternon. Not quite crafting, but close.
As far as how I feel about these in gameplay, convoy combine is super convenient and I’m all about it. Repair is also a neat idea and I like FE7x’s cost-based implementation.
I think a crafting system depends a lot on its execution - how much does crafting matter to get useful stuff? Is it the only way I can get weapons? Is gold super rare and buying common weapons is not cost efficient? I think the merits of a system in a linear game like FE are limited, personally, but I think it can be a fun side objective if there are multiple opportunities to get the materials needed. It stinks to get 2/3 of what’s needed and get punished for missing 1/3 of the secret or objectives, and be locked out of a good item.
I do think this often just boils down to “reward with extra steps”, unless the materials can be used for multiple items (think Animal Crossing New Horizons which gives you multiple purposes for everything, vs. Berwick where each item is only good for a single recipe or maybe two).
I think you’d need to do a lot of work to balance it and make it work in the context of GBAFE