The only issue I personally have with the rarity approach is that various items become rare for so many reasons.
As an example we have an event item like "The Nerdiest Nerd Glasses", an item that was and still is a 1/6 item, but it could change if the event that gave them away comes back. Similarly we have items that are rare for no other reason than being unpopular back when they first released, and got locked out at some point. Custom items, they're usually 1/1 right? Same with legend items, they're usually singular.

I don't think the idea is bad, but throughout my time as an item collector I never even thought of a real necessity for such categorization, it really all depends on the current state of the economy and how many (active) people have the item. Many TF2-inspired items are considered rare, but I personally think they should come back at some point.

As for the time it'd take, no clue where to even start. Establishing a fair way to categorize them would be a priority, but nowadays many games with a marketplace run into the same cycle, some items come back into rotation and temporarily or permanently make the item no longer a rare commodity.
When thinking of rewards for events I usually check whether the item holds a "rare item" status beforehand, nobody likes the idea of saving up tc, or even spending $ on it, to later see it get re-released and diminish in value in a day.

maybe it should only apply for 3d items and custom items get put in their own category not counted on the leaderboard

everything cringe category