I found that if you replace a broken iron pickaxe head with a stone one, the iron pickaxe head will get half of its durability back.

reproduced the bug with a crimson steel pickaxe gemstone mix and it repaired it almost entirely.

You can also do it with a katana so anything that you can take off the head and put it back on the exploit works on. Due to this armor can not be repaired this way.

Not quite sure what is causing this bug.
Has something to do with the way it handles switching out tool heads.

Fixed in 1.3.4, thanks for reporting