Item Levels cap out at 999. Items in the shop are *always* an upgrade to what you have (within the 4 categories of hero weapon/armor, ship weapon/armor), until Item Level cap is reached. (Crystal) Crafted Item levels are based upon the level of your equipped highest level item. Pretty easy to skyrocket your gear if you do the 2x crystal craft, pick the highest level you see, equip it, and repeat.
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