Lets make these blue items we find a bit more valuable.
Quest Reward: An NPC will allow you to upgrade a blue item into a rare item, while retaining one or both qualities of the blue item along with a random +1 to +3 additional modifiers.
Quest Reward: An NPC will allow you to merge two blue items together to make a new rare item, while retaining all qualities of both items (no additional modifiers). Maybe re-roll the number amount for the modifier, but keep the same modifier.
Quest Reward: An NPC will allow you to create a new rare item from a white item. (This is already a quest reward in Diablo 2)
Quest Reward: A Random High level Gem
As Quest rewards, these would be a one time per character per difficulty level quest turn in.
I would love to hear other ideas that follow the same mentality as a one time per character, per difficulty quest. Once the quest has been completed and the reward is given, the same character cannot simply repeat it over and over again.