Going along with what Playwhite mentioned. As a quick fix I would return 1 iron/gold nugget for each iron/gold ingot that was needed to craft the item. So, an iron chestplate (8 iron ingots to craft) would return 8 iron nuggets, regardless of current durability.
Not a perfect solution, but one that I think would be fairly easy to implement.
By now the only use for them is ..... well .... storing .... at least we can make something with those chain sets instead of just throwing them into lava....
On the other hand this recicling system is awesome for my pigman farm .... Everything I get there now has some utility. Using item sorters you can easily build an auto-golden sword-cooker and get some extra golden nuggets from the mobs.
Well, iron nuggets don't show up anyplace naturally, so you won't be coming back from caving or exploring trips with any in your inventory, you'll only ever get a few of them at a time when you actually smelt some excess tools/armor you got from dead mobs or a treasure chest. This means that you can probably use iron ingots as a dirt cheap placeholder item in hopper-based sorting systems. And don't have to waste XP renaming a crapload of dirt blocks or grass seeds or whatever on an anvil.
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Unsmelting really only makes sense if the amount you are getting back is based upon the durability of the piece being smelted. The less worn the item the more it should return. Getting around 1 nugget per piece is really ridiculous. Unsmelting should return ingots - not nuggets. Nuggets should only exist as loot and should be used to create ingots for those who don't wish to spend time mining.
Anyone who has done bladesmithing as I have for years knows you'll never get back what you put into an item, so, unsmelting a chestplate and expecting 8 ingots back is unreasonable. The most you should get back is 1 less than what it took the craft the item with the exception of a shovel. If you are using a hopper to feed the furnace the results should be additive so 2 shovels unsmelted in a row would give you 1 ingot. Basing the output on total durability of the items would result in fair returns.