I too believed that the leftmost shard determined the tier 3 effect , however when combining the two shards the rightmost one was chosen in my case for the tier 3 effect. (now believes in the dominant element theory)
Eladrin has confirmed in his previous post that there is a successful upgrade from land/sky to land sky II. I am totally confused because the combined shard had "balance of land/sky" on it. There is no reason i can see why this didn't upgrade the item to land/sky II.
Regarding the rest of your post Garth , i agree entirely.