Apparently we're all too lucky for our own good when it comes to the dreaded upgrade chest.
I propose two things:
a third option be given to automatically recycle items for prismatic gems, along with a certain percentage chance (I would think 50% would be fair) to receive twice as many.
Amulet of Fury gives 1 gem for failure
Amulet of Fury gives 1 gem for recycle + 50% chance to double (25% chance to double seems to have more support)
If T2 is not intended as the max for this new system then I'm sure there's already ideas for where to go from there. If not, then I would propose the recycle option for T2 items as well, that would give twice as many gems as their non-T2 failure would.
Amulet of Fury (T2) gives 2 gems for recycle
The Fury is just an example
Feedback is appreciated, so if you have differing opinions or ideas please share them.