There are a number of activities in PS that are quite boring, like mining, smelting, crafting, and repairing your weapons and armour.
So we could make it more fun by adding arcade-like mini-games? I'm with Mythryndel: don't! If I want to play tetris, I can do that anytime and anywhere I want.
I actually like these "time-outs": they give me an opportunity to devote more attention to guildchat, or to have some private converstation in tells. Or do something else entirely.
Getting back to the original post: how could we make weapon/armour repair more realistic?
I agree there should be a chance of failure or of ruining your weapon/armour. I would also like to add the idea that you ought to have special tools (outside the repair kit) to repair your equipment. With just a repair kit, you should not be able to fully repair your weapon/armour, unless you had access to an anvil. So with a repair kit in one hand, your battle axe in the other, using an anvil, you would have a chance of fully repairing that axe. Without the anvil, it would take you longer, you would repair less damage, and you'd have a bigger chance of ruining your axe.