Hi BurgerDaddy, thanks for sharing your thoughts. I also think that items being consumed in battles is the right choice, it is adding a nice layer of decisions in battles (otherwise the battles would feel really dull).
There is the concept of durability in game. Each crafted weapon (the axe and the club) has a 3-times use, which is intended to be a return of investment. The knife can "just" be found (and I had some runs where I could have opened a knife shop after some days :-D). The cool thing with knife is: it can be used unlimited times for crafting and cutting. Let me share my secret of how I am using it: I always make sure to have one knife in my pockets. When I find branches, I sharpen all of them with it (keeping only one for the next axe). Sharp sticks have 3 attack points - pretty good! And when cutting animals, the bones also have 2 attack points. So with this one knife I can create a lot of attack power.