It's funny people mention the UI, I actually find it the weakest part of the game…those massive item piuctures is just horrible oblivion did this better.
I agree with you. I'm not a big fan of the TW2 UI. Like you, the icons could have been a lot smaller on the PC. There's also a number of details that I could not find any explanation for except on the internet - the game manual is sorely lacking explaing stuff about the UI.
I also keep dismantling (converting to raw materials) stuff that I have equipped. For example, I'll be in my melee outfit and dismantle a bow, quiver, or staff because I don't see those items bracketed unless I'm in my archer or mage outfit, respectively.
Early on I found a pretty decent one handed weapon that I realized I had dismantled when I was in my mage outfit. It was such a good weapon I felt it best to reload from a prior save game from before I had accidentally dismantled it, losing about 20 minutes of gameplay.
Considering how often you dismantle things, the UI should have taken this into account. A little checkbox or something in the inventory screen to filter away anything you have currently equipped would be hugely beneficial.