When to use taxonomy vs content type? I have a project that allows people to add 'skills' and 'resources' to a system. Initially I was using a taxonomy field for the objects themselves because it seemed to make it easy to look up other 'skills' and 'resources' that had already been added to the system. 

However, I am beginning to wonder whether this is the best plan. 
The taxonomy system allows for a 'library' of objects to be created which can be shared but this isn't the right way to use taxonomy which should be for 'meta-information'. 

I could have a preexisting taxonomy structure of 'stuff' like ebay's categorie and allow people to add their own stuff to this library. People would add 'skills' and 'resources' as their own content types with additional fields- title, body, image, and then tag them within this taxnonomy structure. However, I was attracted to the idea of keeping it really simple; e.g. a drill is only a drill not a bosch, 12v battery powered handheld drill with hammer setting and masonry bit :)

If I wanted to have a 'drill' categories with a pool of 'drills' with more specific drill information what would be the best way to do that?

Sorry there are a few questions here, but I'm hoping to put together question an exciting distribution from this project, so any thoughts will help and hopefully go to something worthwhile.
Content type defines kind of information, different content types means different structure and different nature of content. Taxonomy is for categorisation. They can be interchangeable to some extent, but it's really up to how you want your data defined.

If all nodes we are talking about perform the same function in the system and are supposed to have the same fields, keep them categorised by taxonomy. If their function should be different, make content types - it does not mean you need to give up taxonomy then (but you may if it's no longer needed).