My group is almost done with book two of Age of Ashes and we just hit 8th level. According to the materials section of the book, dragonhide object (standard grade) is 8th level and dragonhide armor (standard grade) is 12th. Would our crafters be able to craft a dragonhide object at 8th level that happens to be a breastplate? Or would they need to wait until 12th level?
I would say not because if an Item of any type, custom or otherwise, functions as multiple different pieces of equipment then its overall Item Level will match the highest Item Level that corresponds to the various Traits it has.
The Object rules would apply to things like Spellbooks, Clothing (Especially useful for Monks and Spellcasters), Backpacks, or Tents so as to protect them against the elements but not to anything that has the properties of an actual suit of Armor.
It seems to me that the intention is that you can craft "items" out of dragon hide at 8th level but not armor. That would include anything normally made out of leather so backpacks, pouches, standard clothing, etc...
Standard grade armor made from any precious material however is 12th level so crafting such a suit of armor of any type would require the character who wants to craft it to be 12th level. This seems intentional, if a bit vague if you only look at the "materials" section of Crafting & Treasure.
Nothing is stopping the GM from allowing a character to craft such a piece of armor anyway, especially if they make the process a quest. Find some master Armor Smith and do a task for them for assistance, that sort of thing.