Don't know how it works over there, but the system is pretty simple and it's already functional on the g.o.d.+ chronicles - it should work similarly here, perhaps with more limitations (I'm not sure to which extent does the official system prevent type of armor change).
But generally speaking, A heavy can be changed to D, C, or B or A heavy, B robe can be changed to B, C or D robe and lets say C light can only be changed to C or D light. It's fairly simple and yet it has such a large revenue potential, definitely bigger than those lame 'PvP' casino things they pull up with