This is more of 2 bugs but they are related.

If I go to design window and select to edit a unit, i will be shown the highest quality items I can make of each material. So, lets say I have a tier 2 sword, it will show me the tier 3 sword of the same type.

However, this is not the case with talismans for some reason. If I have iron ring tier 1 equipped, then it will not show me iron ring T2 or T3 even though they are a straight upgrade. I must unequipped the iron ring T1 for it to show the T3 option.

However, this brings me to the second bug. If I unequip iron ring T1, then it will now show me iron rings T1, T2, and T3 in the design menu even though I have "hide obsolete" button on. it will only show T3 for all other talismans, but that one talisman I just unequipped is an exception