I'm working on a definitive answer to this. On first guess, you should be able to add this to the recipes, in the appropriate section, using something along the lines of:
<recipe name="Foolproof Steel" activateitem="Foolproof Steel">
<step use="Foolproof Steel" on="LOOT_ITEM" result="LOOT_ITEM" skillcheck="0" />
</recipe>
I haven't tried this though.
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