I'm glad you like it
It's in Dragon #289, p. 56.
Re-reading the rules, now, i remember that i made deals with the DMs, regarding the price of the item.
The rules state that a leveled item has all the enhancements (powers) from the start, but they're not unlocked. It's cheaper to buy a leveled weapon, yes, but it's still way over the top for a low level character!
I agreed with the DMs that i would pay the initial value for the item with a normal +1 enhancement (the bare minimum for a leveled weapon/armor), and, as part of the ritual(s) of unlocking the powers, i would sacrifice gold, gems or whatever to pay for the enhancement.
Of course, if you want to start with a simple MW weapon and, through wit and guile or might and brawn "discover" that it's actually a leveled weapon, you could bend the rules a bit and have the character conducting a quest and performing a ritual, so that it unlocks it's magical properties... The first "power" - so that this flows into the mainstream of the RAW - would have to be the +1 enhancement, though. The imagination is the limit here
EDIT: We also found important that the leveled item (in my case, weapons), should be directly linked to the wielder.
For example: if the character was Evil, he/she would never unlock "Holy" in the weapon.
Also, as a sign of this link, the weapon would perform as a simple +1, in the hands of another character, regardless of it's current power level BUT the downside was: it's supposed to be the weapon of choice for the character, the one and only among all others!
For example: I remember i had to "dump" a +2 Flaming Longsword, while i was still working on leveling up my +1 Bastard Sword to +2...