I've always like something similar to this. Of course it would have to involve quite a bit of balancing however:

Torso fusion: +5 hp, +X E or +X heat.
Weapon fusion: +1 dmg, +X energy drain or +X heat

Each time you fuse a weapon, you have the option to level up one of the selected upgrades. With heat weapons, only heat or damage may be selected, energy weapons only energy and damage and physical weapons can have it all
Another cool additional thing that could go with this is a colour change depending which upgrade you've chosen to level up the most. So the more you upgrade an item for damage/health, the blacker the item gets. The more you upgrade an item for heat the redder the item gets. The more you upgrade something for energy the bluer the item gets.