Basically dragonshards is used for almost everything in magic. Need a fine sprincled dust for a spell component, you can be sure that its finely powdered dragonshards. Need to create a wand of some sort. Well it sure as heck will need one shard in it to function properly. So the general idea is that when my players find Dragonshards lying around as treasure its possible to either sell them or to use it as part of the cost in rituals. And if one wants to use them as combat enhancements one need only reflavor some existing magical items such as Power Jewel (pg176 AV) or others you may stumble upon.
Just a thought I had on how to get some more Eberron essentials in here without having to come up with stats for it.
Go check out the Power Jewel, page 176 of Adventurer's Vault.
Not to be rude, but I sort of mentioned that in my own post :P
So far what I've been doing is giving proper descriptions of literally all magic items the party find/receive, making sure to emphasize the dragonshard as the central focus of its magical powers. It's always constantly swirling and bristling with power, especially if the magical property is elemental(ish) and as such uses a Khyber shard with a bound elemental. In such a case they can even communicate with it, even though they're unlikely to get anything but angry roars in response. This is all "just" flavor, of course, but has done wonders to give it a proper Eberron feel.
The theoretical problem so far is the Disenchant Magic Item ritual. Though it's easy to imagine that twisting the shard's power to another purpose than it was initially intended for would make it less effective (thus the one fifth value rule), I've been playing with the idea that the shard would retain its full power if it's just transferred from one item to another of the same item slot.
Doing so could also relieve some of the forced feeling of trying to make sure enemies carry magic weapons the players actually can use.
If dragonshards carry over the "+4 flaming" or whatever property to other weapons, they could find pre-programmed dragonshards as treasure, or just move them from a captured weapon to one they prefer.
They'd still have to use the (Dis)Enchant Magic Item ritual(s) to actually perform the dragonshard transfers, which would act as some sort of balancing mechanism, both time-wise and gold-wise, to the tactic of carrying several different shards for specific tasks - which in itself definitely would go in line with "Rule of Cool" as far as I'm concerned.
I'm thinking that you might have to attach a specific cost to Enchant Magic Item to do this and still maintain internal consistency, as the price of Enchant is determined by the level of the item you wish to create and as such is reflected in game in the amount of residuum used.
As I've said though, this is still very much a work in progress. I've yet to test it in game and kick balance issues in the face, but in my dreamy fantasy world it seems like it would work and do so fairly well.
I've been playing with the idea that the shard would retain its full power if it's just transferred from one item to another of the same item slot.
One of my players talked about a ritual that lets you transfer a magical ability from one weapon to another, but I have no idea where that is, but I'll ask him. Just thought that might help you with the transfer a shard problem ;)
Do tell if you find out. I've checked all the books I have with rituals (all two :P) and found nothing of the sort. It would indeed solve part of the problem.
Adventurer's Vault pg. 199