[Joe]

I'm not sure if there's a hard ruling out there, but if I were GMing, I think I'd probably rule that the Signature Gear weapon does break, but in a highly interesting and dramatic fashion. Then I'd make sure that significant subsequent screen time is devoted to making a big to-do about the reforging of the sword-that-was-broken, or whatever (at no cost to the PC, of course). Basically I'd try to find a way to work the loss and recovery of the iconic weapon into the story, on the principle that having an iconic weapon is cool, but temporarily losing an iconic weapon in dramatic fashion and then regaining it in an even more dramatic fashion is even cooler.

A quick analogy, just for fun:
Luke carries his father's lightsaber. That's fairly excellent.
Luke loses his father's lightsaber when his father cuts off the hand that was holding it, and Luke then makes himself a new one of a different color? That's now extremely excellent.

(I know Lightsabers aren't in the DFRPG, and aren't subject to breakage anyway, but you get my point :) To my mind, if you just rule "Nah, it doesn't break", then you're missing a chance to make the Signature Gear advantage really sing.)