I absolutely adore Daggerfall's magical weapon effects, but I understand that besides low resolution they also have atrocious framerate. Using 3D renders is probably inevitable, but I'd at least voice my support for simple, pseudo-realistic surfaces. Among the hammer variants in the first post I'd prefer something between the third and the fourth.
I'm totally happy with the shapes of everything though. If nothing else satisfies purists (like me, to a degree), I'm sure those renders could be used as base for painting into/over them. AFAIK that's how most recent 2D fighting game sprites are done.
I know it's a fine line when updating old, beloved classic. On one side you have overly rigid purism that considers every visual bugfix a desecration of masterpiece. On the other there is a desire to get rid of every visible pixel or polygon edge at the cost of breaking the original distinct art style apart.
Regarding resolution I don't think there is a downside to rendering stuff at absurdly high resolutions. In case you need to go back you don't have to re-render, and your work is a bit more future-proof. What will your grandson with a 16k screen say when you introduce him to Daggerfall?
And you can always downscale the final result just before release.
Just today I learned my paperdoll figure is too fat. Luckily I paint at half the target size, so I can just squish the whole thing without noticeable loss of quality.
One more idea - would you render each weapon from the same angle as seen in the inventory screen? I'd grab those, incorporate them in my paperdoll art and we would maintain consistent look among mods. Or anyone else for that matter, if my graphics turn out to be unpopular or I happen to burn out.