The Deep Iron Sword would be especially good for mining because you go deep into the caves and you got extra damage for the mobs you could find there, it would work like detecting the actual layer or place (like that thing that triggers the cave sounds).

could be integrated with some other effect on the deep iron pickaxe
for instance the pick being able to mine at regular speed underwater

[could even be nerfed by some side-effects, faster hunger increase, higher durability damage]

If Deep Iron is gonna have handicap, i think the others sets would need to. for example the Adamantine armor has a very powerful effect (Well fed) and you can't nerf "Well fed" so a side-effect would be nice for balancing that

I agree with the fact that Adamantine armor is really OP
I felt that when I was testing the first alpha...

However yes, indeed some tools/armors would need some side effects, but some others don't really [example: midasium sword]

Yes, i don't believe that everything deserves a handicap

I'm feeling that Black Steel deserves more the effect, making it more worthy the alloy, plus Deep Iron alone is easy to find.