Yes, you change the rune sword (or whatever) to an exactly identical sword, but without the runes. You even have the benefit of changing the color of the hilt (or whatever detail) if you need the sword (or whatever) to be even more inconspicuous.
Yeah, trying to shoehorn "Perdo" to fit any and all "destruction" doesn't always make sense. For instance, you wouldn't use Perdo to "remove" a cave or a hole in the ground - so why use it to remove something engraved/etched?
If you feel something needs to be changed to make sense, feel free. It's your Saga.
Sound reasonable to me to use either Perdo to destroy the images or Muto to change them to match the background, with the same effect. There's more than one way to skin a cat in AM, as people like to point out in these forums.
I agree that level 4 or 5 seems a lot more reasonable than 20 for a spell that obscures writing for Sun duration. This is the sort of spell that one sponts; who's going to spend a season learning it as a formulaic?