The Horadric Cube can be used to combine lesser gems and runes into higher ones, repair items, create items, add sockets to items, remove socketed gems, jewels and runes from items, and so much more. The recipes various Horadric Cube formulae can be found below.
Horadric Cube recipes are explained in CubeMain.txt (download and install ATMA V to view this and other game files) and the above recipe explicitly states to use 100 % of the ilvl. The ilvl, while not visible in-game, may be determined, depending on how the item was obtained (dropped, gambled, shopped).
If you look at the list of all runes, you can find out the cube recipes to create a rune of one level higher than Ort. Here are the Ort attributes: Rank: (r4) Weapon: +1-50 Lightning Damage. Armor/Helm/Shield: +35% Lightning Resistance. Ilvl / Clvl Required: 21.
There are Horadric Cube recipes you can use to create Magic Amulets, Magic Rings, Magic Shield, put Sockets on Magic items, and reroll the affixes on Magic items. Generally, most Magic items are not interesting enough to warrant a trip through the Horadric Cube, but rerolling is popular for Jewels and especially Small Charms.
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diablo 2 horadric cube recipes