Well, just affecting the durability of a weapon is almost negligible, as it would be simple to repair it w/ a bit of col or just get the repairing skill and do it for free. It may not make sense if this was irl, but a lot of systems we have don't entirely make sense if they were translated into real life (do you know how hard it was to explain to my mom that I couldn't just wear a heavy gauntlet on my left hand/arm to use as a shield against attacks?). To me, the base question is "why do we want people to use coatings?". The answer, to me, is "because they use assassination/tricky fighter-type builds" like yours. That's why coatings have increased effectiveness when used outside of combat. It's also why they lower damage.
Let me make a bit of a parallel here. Think about enchantments in skyrim. Right now, if we don't mess with damage, coatings are almost identical to enchantments. They improve the effectiveness of a weapon at the cost of making the item less durable (in skyrims, that "durability" is the little gauge that has to be refilled with soul gems). Even still, there's no reason not to use an enchanted weapon in Skyrim. Yet we don't want players to have no reason not to use coated weapons in SAO. Reducing the damage seems like the perfect way to do that. A fighter could have a bunch of different daggers, each coated w/ a different substance, to make them a tricky opponent to beat. A poison dagger would turn even a small cut into serious damage, a paralysis dagger can turn the tide in an agility-vs-agility battle and make a strength player have almost no chance of hitting you. Now, you'd have to keep switching weapons into the most useful one in the current situation (probably using the tactic of "mess them up until I can get a couple of hits easy, then stack a half dozen poisonings on them and they slowly die"), which brings to mind maybe adding some kind of hotbar/quick-equip system in SAO to change weapons/armor on the fly and access useful items like healing potions, but you would choose to take a risk of lowered damage per-hit to gain enough control over your opponent in combat. It's still a viable method of fighting, especially because poisons take as much of an effect on a small scratch as they do with a direct hit.
P.S.: If you're just going for damage, I think we should balance it so that poison will deal more damage than your basic dagger slash, just over time. So you would be dealing more damage w/ each hit, you'd just have to survive your opponent a bit longer.