In the hopes of having a game where magic is still part of the world, but still quite nerfed, here's a few ideas for some house rules, which of course Neruz could morph, mix and match as he wished... spoiler'd because I actually got quite a bit of stuff down
-wizards only get to pick two spell schools (plus divination and universal), and can only use those schools; specialized wizards get one school plus universal
-clerics ONLY get their domain spells, plus maybe a couple cure/inflict spells per day
-half-caster classes (paladins, rangers, etc.) don't get any magic, or they get magic starting at a much higher level
-arcane casters (most specifically wizards) don't automatically receive their spells upon levelling up; they must do prolonged research (presumably involving Know:Arcana or spellcraft checks, dependant on spell level)
-items can only be enchanted by the person who made them (i.e. to make an enchanted sword, you'd need a level 3 wizard with craft:weaponsmithing)
-potions require craft:alchemy checks to make, and may explode if the check fails
-staves and rods require the spellcaster to sacrifice the spell slot(s) used to enchant the item for a year (or permanently)
-items don't grant "always on" enchantments; they only allow the wearer to directly cast the spell on themselves (as a standard), or it only functions for 10 minutes a day, or the effect wears off after a while
-ALL spells require a knowledge (arcana, religion, or nature as appropriate) to cast of DC 10 + 3 x spell, or perhaps a concentration check (casting defensively would add 10 to the DC or something)
-Casting a spell with a metamagic feat additionally causes 3 x spell level adjustment of nonlethal damage to the caster, due to exertion
-magic items are tiring to use, so wearing magic armor requires a constitution check every hour... the DC starts at 10 or 15, and goes up by 2 for each consecutive hour (going an hour without wearing it reduces the DC by 3, back down to the minimum 10 or 15)
-magic follows Conservation of Energy/Conservation of Mass/ Mass-Energy Equivalence... So casting a spell that creates heat or moves things around exhausts the castes or requires some kind of powerful battery, a spell that 'creates' matter requires an equivalent sacrifice of similar matter (so trees can be turned into paper but not swords), and to create matter from 'nothing' actually requires a LUDICROUSLY LARGE amount of energy (think: Back to the Future... 1.21 Gigawatts, moving at 80 mph?) Also, summoning spells require you to know the name of whatever you're summoning, and you have to provide a body for it to inhabit
-control of the undead requires ongoing concentration checks to retain control, each controlled creature adds to the DC of the check, and failed check causes all minions to attack you/ crumple to the ground / stand around mindlessly
-mind-affecting spells open up the caster's mind to the subject, so a target who beats the Will save of a spell can reverse the effects, and basically use the spell on the original caster
-there is a group of magic-haters who have long-range magic sensing devices, and basically will hunt the PCs down, sending stronger and stronger people to kill us until we're all dead, or we take out their leader (or run far, faaaaar away)
-because magic is F***ing complicated, a spell takes up more like 5 pages per spell level... requiring wizards to carry lots of spellbooks (or make do with limited repertoire), sorcerers must spend 10 minutes per spell level to prepare their daily spells, clerics only get to ask for about a quarter of their daily spells, druids have trouble casting any time they can't see trees... scrolls are suddenly more like pamphlets, and cost 5x as much to scribe...