To clarify, the current item gathering penalties are reduced by an unmodified Craft Trap skill. The success rate is influenced by certain class levels and modified Craft Armour/Craft Weapon skill. Though I'm sorry to hear that most of the current characters find these skills useless and so don't want to bother with item gathering, I don't think we'll ever change that trend by exchanging them for skills everyone conveniently has already.
For those who don't enjoy their level-up screen, DMs can provide you with an xp cap to prevent monster kills from giving you more experience and you can discard excess xp through your emote menu yourself (the option appears under Other whenever you can take a new level). Perhaps we can introduce an alternative system where you temporarily store your xp into an undroppable item or the like (though we'll have to factor that into all xp calculations), but whatever the solution, it's not the purpose of the enchanting system to solve the excess experience troubles
The gathering skill is your skill level, from 0 to 40. The skills and class levels that modify it aren't included in that number, only added to it for purposes of the gathering check. The skill itself should go up to 2 after about 5-10 successes (assuming the enemy isn't Effortless), and though you'll need increasing numbers of successes for every extra rank, your success rate increases as well. It should take roughly the same amount of effort going from any one rank to the next if you don't have any modifiers, and otherwise the early advancements take the least work.
Effortless enemies drop the same number of goodies as other enemies while being easier to kill, but they don't do nearly as much for your advancement rate. If you start your gathering at higher levels, try to aim for bigger monsters.
When an enchanted item has no properties, that's usually a result of a mismatch. Some creature components only work with certain items. An attack bonus will not be applied to a shield, for example. The description on the item can be some indication of what the component does on its proper item type. The hollowness might have to do with pocket dimensions on containers.
Lastly, I fully believe there's room for improvement in the system. I may not do much scripting work at the moment but there'll be others who can make the tweaks. The key concerns are of course adding drops to creatures that don't yet have them, and optimizing the rates of success and advancement, of which the Combat Penalty vs XP penalty discussion is a part.
If the pace is too slow, there's nothing to gain but frustration. At the same time, I don't believe in making things too easy. You can work for your rewards and enchanter's reputation if they're to have any value