On the one hand, you are correct in that you cannot fully level up an item using PvP alone. On the other hand, the only thing that a weapon gains use from outside of Iron Banner is the perks that the weapon has, so leveling up attack and defense (both of which require world resources at their highest levels) is immaterial to the PvP experience unless one wants to participate in the Iron Banner. I look at Iron Banner, however, as the PvP version of the Vault of Glass. A cute addition, but only for those who play more hard-core outside of their preferred playstyle. Of course, having said that, it is easier to meet the requirements for the Iron Banner than it is the Vault of Glass, so once again, PvP has the advantage.