Preferred Tool
Let's look at this bandage-making session first:
The character has a small knife in hand, but the system choose M. Shortsword for her.
So this is a preferred-tool issue. We know that the handicraft is a fixed hidden skill, and unless heavily penalized there are no effects (In lumber making (not sure it's timbercraft/carpentry or general handicrafts) there are seldom one 1 inferior one accompanied with the decent ones)
Same when there are no preferred-tools in some sessions - There are Board knife, Knife and Small knife. When crafting the player certainly want small knife for easiness, but the system would choose a board knife for alphabetic order...
I also noticed that, in lumber making, M. craving axe is a "satisfactory" tool, but appear in red. In one of my save branches, the character get one M. handaxe, and the handaxe session is without the "warning", and seems to make more smoothly...
I'm not sure about the (plain) knife. In new version the knife price decrease its price from 48 to 6, and becomes much lighter. I think this kind of knife may be the preferred tool to light works like cooking. Or it's just a light general tool?
Make Good from Bad
It's possible - I mentioned a exploit in this thread:
I've just found a "exploit", or it's intended?
Bandages made by harsh textiles are decent, and the decent bandages can be made into decent cords...
While PALU mentioned that items can be combined to increase quality ridiculously - like 0.01 lbs decent with 4.99 lbs ragged makes a decent product if the order was placed right.
So why make it "official"? Like you pay more efforts or have more skills, the "bad" can be increased only one quality level. Like if you bother use the high-nutrition fat of the same animal, the fur quality has a chance to rid of "ragged"/"harsh".