1) Metallurgy should work properly(decreasing the chance of negatively modified items, not increasing the chance of positively modified ones) however is probably is a bit OP at the moment, will keep an eye on it and tweak as necessary.
2) There is nothing in the game currently that increases the chance of positively modified items.
I do understand the desire for such a thing given how bad the drop rates were but the current implementation should eliminate the need for it.
For the bugs currently we know of 2 modifier/prefixes not working properly("Fine" for leather and "Lordly" for chain type of armors) and those will be fixed in the hotfix. If you know of more problems please do let me know.